According to a snap survey by TaranisCo Advisory, a large number of construction companies are in danger of having their B-BBEE status downgraded. This is due to a failure to implement the preferential procurement and supplier development element (PPSD), which collectively affords companies the most points on the scorecard.
Companies surveyed reported that the Construction Sector Code was released rather late in 2017, and for those having February as their financial year-end, it came too late for them to make any meaningful interventions to optimise their scores before the next B-BBEE audit.
Mandatory 'priority element' status
According to Gerrit Davids, lead advisor of TaranisCo Advisory, “Construction companies must firstly be aware that the PPSD carries the mandatory “priority element” status wherein a minimum of 40% must be scored for all three applicable sub-elements.”
“Irrespective of what the company scores for PSSD, if they don’t achieve the 40% sub-minimum, their points will be downgraded to zero.”
Davids says, “A company could be downgraded from a level one to that of a level six status, should it score zero for this element and it will not do them any good when tendering for government contracts.”
The sector code also now instructs companies to appoint people from senior management to coordinate the implementation of the PSSD and it excludes the sub-element of enterprise development, only allowing for supplier development, with the effect that it could only support those qualifying small contractors doing business with it.