Taking the B-BBEE out of procurement

…..article May 2022……

New Bill adopts non racial approach….

Dean MacPherson, the DA’s shadow minister of Trade, Industry and Competition, states that the DA will be introducing a private member’s Bill, the Preferential Procurement Policy Framework Amendment Bill, which takes a completely different approach to the question of transformation coupled to a plan to introduce “sustainable development goals as targets rather that the current wrong system of racial quotas”.

The Democratic Alliance have held the view for some considerable time that black economic empowerment (BEE) cannot be legislated for in terms of the Constitution and is counter-productive. They have further stated many times in debate that the state’s (BBBEE) programme is both racial and selective and furthermore its clumsy application damages the South African economy in terms of foreign investment.  It is therefore not in the public interest, says MacPherson. 

At this point no such Bill has been tabled but drafts are known to be circulating. In all probability the timing of such a Bill would be as fresh legislation in the new Parliament after elections

No majority

For a number of years parliamentary debate on various subjects, the DA has adopted the principle of voting against any black empowerment legislation in the knowledge that whilst it has to acknowledge the ANC’s majority view on the application of B-BBEE and whilst realising that such laws will inevitably be passed, the DA has studiously in each case before Parliament voted against such or abstained on the National Assembly final they still contribute to the mechanics of producing such legislation in the hope that they can ameliorate terms and conditions.  

In the case of the Employment Equity Amendment Bill, just passed and proposed by Minister Thulas Nxesi enforcing sectoral black empowerment targets, the DA, although debating the Bill in the interests of watering down some its more radical clauses, refused to vote for the Bill in principle leaving the ANC to push the Bill forward based on its majority, the DA therefore abstaining.

Ultimate power

DA leader John Steenhuizen has stated during the EE Bill’s progress that the setting of targets and quotas for business to achieve with consequences   was “racial bean counting” and queried the constitutionality of such proposals, even if they are to be set “after discussion with industry sectors”. Steenhuizen has pointed out that the Minister has the final say in whatever target is set for any sector.

On this theme, MacPherson’s Bill is designed around the stated principle of removing  wording referencing the B-BBEE factor on the question of state procurement when tendering process, the proposed alternative emphasis being upon a tenderer’s competency to supply the right goods at the right price as distinct from an emphasis, as Steenhuizen points out, of the past practices where a B-BBEE status is gained “through wrong perceptions and selective practices favouring one person against another by the colour of their skin”.

New goals

Instead of a B-BBEE head count, MacPherson has worded the Bill so that preference is given, under certain circumstances described, to a company which makes the most positive socio-economic impact as measured by a variety of Sustainable Development Goals (SDG’s).

The Bill will also seek to repeal the Broad-Based Black Economic Empowerment Act in principle on the same subject.

Colour irrelevant

Macpherson, when asked by the media why he thought such support would arise in government thinking for such a sea change, said, “One of the most powerful ways government is able to implement policy is the manner in which it selects companies which it wants to do business with.   The ANC knows this.   Minister Nxesi’s past practices aren’t  working and he is beginning to realize this.”  

He continued, “As soon as many in government come to terms with the fact that BEE is not working as it should and that the investment barons are getting tired of waiting, the better.   Preferential Procurement Policy Framework Amendment Bill will recognise companies which make the most positive socio-economic impact as measured by a variety of “sustainable development goals”  instead of a B–BBEE status measured by an unconstitutional approach.

Practical

“Accordingly, competency and pricing will take priority as the effective measurement tools and cost-efficient service delivery will benefit those reliant on government services the most.”  The proposed benefits of the Bill, says MacPherson, are that this kind of approach will go a long way further in leveraging the country’s significant government procurement budget of nearly a trillion rand towards incentivizing a private company’s contributions towards achieving SDGs.

Macpherson added that in the DA’s view the most important factor for government procurement will remain price and functionality as the capability to execute and lowest cost will benefit those reliant on government services the most, and in turn, lead to the greatest upliftment of society as a whole.

Wiser and better 

Root causes of inequality will be directly addressed without relying on ineffective trickle-down redress as per the current SDG redress model, he said.  “The new Bill when ready will target the vulnerable and disadvantaged directly, making it more difficult for those who do not require benefits to accrue them. This change in focus will also go a long way in stemming rampant corruption and patronage at the same time, he noted, concluding that  the SDG model will provide for 17 different goals, which companies focus on based on what they will have the most sectoral impact on.”

 The DA says that it has every intention of introducing their Bill “as soon as is possible”.  Being a private members Bill, the first indication of its tabling will be a parliamentary notice, not a government gazette.

 

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