PPPFA NO 5 OF 2000 AND REGULATIONS

PPPF ACT NO OF 2000 AND REGULATIONS PURPOSE To give effect to constitutional requirements as stipula- ted in sections 217(3) and 217(2) To address the imbalances of the past. Thus allowing for a preference system without forfei- ting the principles of fairness, equitable, competitive- ness, transparent and cost effectiveness PPPFA and Regulations came into effect on 10 August 2001

APPLICATION OF THE ACT Compulsory when applying the PPPFA to consider the following: Points for HDI ownership. Proviso: HDI must be actively involved in day-to- day management of business. RDP-goals to be promoted must be clearly specified in the tender documents, including points.

Goals must be measurable, quantifiable and moni- tored for compliance. Tender must be awarded to tenderer who scored the highest number of points, unless sound reason justify award to another tenderer. Sound reason must stand the test of any court of law. Tax matters must be in order.

POSSIBLE GOALS TO BE ACHIEVED The promotion of South African owned enterprises: The promotion of export orientated production to create jobs; The promotion of SMME’s: The creation of new jobs or the intensification of labour absorption.

The promotion of enterprises located in a specific province for work to be done or services to be rendered in that province. The promotion of enterprises located in a specific region for work to be done or services to be done in that region; The promotion of enterprises located in a specific municipal area for work to be done or services rendered in that municipal area; The promotion of enterprises located in rural areas;

The empowerment of the work force by standar- dising the level of skill and knowledge of workers; The development of human resources, including by assisting in tertiary and other advanced trai- ning programmes, in line with key indicators such as percentage of wage bill send on education and training and improvement of management skills; and The upliftment of communities through, but not limited to, housing, transport, schools, infrastruc- ture, donations and charity organisations.

(No preference for all amounts exceeding R2million) POINTS ALLOCATION Previously the system operated on a 88/10/2 basis for contracts up to R2milion only. (No preference for all amounts exceeding R2million) i.e. Price max 88 points Equity ownership max 10 points Women ownership max 2 points Tenders would be awarded to tenderers who scored the highest number of points The 90/10 system was only applicable to Projects by Department of Public Works – irrespective of amount of contract.

CURRENT SITUATION (Based on 2001 regulations) Preference applicable to all tenders. Contract less than R500,000 apply 80/20 system i.e. Price Functionality max 80 points HDI and other RDP goals max 20 points This means government is prepared to pay a 25% premium on these contacts.

Contracts in excess of R500,000 apply 90/10 system. i.e. Price and Functionality Max 90 points HDI and other RDP goals Max 10 points This equals to a 11,11% premium which govern- ment pays for these contracts.

CONCERNS/CHALLENGES No formulated means of applying policy. (GOALS ARE SET BY OFFICIALS WITHOUT SPECIFIC TARGETS TO BE ACHIEVED) Lack of capacity/systems to monitor fronting “Rent a Black”. Non uniform applications by various forms of State. BEE and PPPFA not aligned.

Limited expertise and knowledge in all spheres of government of how to implement and apply act. Fragmented interpretation of definitions. Some RDP goals are not measurable. Calculations are laborious (Too many calculations)