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
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
B-BBEE Status Level of Contributor
Number of points (90/10 system)
Number of points (80/20 system) 1 10 20 2 9 18 3 8 16 4 5 12 6 7
Non-compliant contributor

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 %
Buses (Bus body) %
Canned / Processed Vegetables 80%
Rolling Stock %

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 utilise the 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