June 2011
MJ Esterhuizen Accounting Services CC
News on Government procurement:
The Government Gazette 8 June 2011 has published new Preferential Procurement Regulations that will take effect from 7 December 2011. Here are a few snippets from the revised Preferential Procurement Regulations for those of you that do business with Government. Procurement above R30 000 up to R 1 million rand must be done in accordance with the 80/20 system, which means that the price will determine 80% of points and the other 20% will be decided by your B-BBEE status level of contributor certification. For tenders above R1 000 000 the 90/10 system will be in use. The following scale will be used to award points:
| B-BBEE status level |
Number of points out of 20 |
| 1 |
20 |
| 2 |
18 |
| 3 |
16 |
| 4 |
12 |
| 5 |
8 |
| 6 |
6 |
| 7 |
4 |
| 8 |
2 |
| Non-Compliant Contributor |
0 |
The contract will be awarded to the supplier that obtain the highest points out of a possible 100% points (80/20 or 90/10) and which is found to be able and capable to execute the service or supplied the goods as required. This means that the "system" will decide who should get the bid and not individuals.
Suppliers with annual total revenue of R 5 million or less qualify as Exempted Micro Enterprises (EMEs) on level 4, and only need to submit a certificate from a registered accounting officer. If you are not an EME then an official B-BBEE status level certificate must be obtained from an accredited verification agency. Without these documents any supplier will automatically be classified as a non-compliant contributor which will effectively hamper your chances to win any tenders. So the message is clear, ensure that you have such a letter or certificate ready by the 7 December 2011. You also need to take note that major Public entities like Denel, Eskom, SAA, SA Post office, Telkom, Transnet, SABC as well as their subsidiaries has been included in this procurement regulations as from the 7 December 2011 and therefore all business with any public Institution will be done in accordance with this regulations.
Reportable Irregularities?
In terms of the Companies act and Regulation 29, an independent reviewer has a legal duty to report a "reportable irregularity" to the Companies Intellectual Property Commission (CIPC). This raises the question: What is a reportable irregularity?
A reportable irregularity is any act or omission committed by ANY person responsible for the management of the company which:
1. Unlawfully caused or is likely to cause material financial loss to the company or member, shareholder, investor or creditor,
2. Is fraudulent or amounts to theft,
3. Causes or is likely to cause the company to trade under insolvent circumstances.
When an independent reviewer has reason to believe that any of the above circumstances exists, he/she must report the irregularity to CIPC without delay. Only then, and within three business days, will the reviewer notify the members / board of the notification to CIPC, after which due course is followed in resolving the relevant matters. It has to be noted that businesses trading under insolvent condition now have, in terms of the act, serious consequences BUT fortunately business rescue options will be available to such companies. (we will deal with this in the next newsletter) .
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