The preferential procurement aspect of the scorecard allows you to gain significant points (as many as 20) if you buy from businesses that have a high BBBEE score. In this way, the pressure to become BBBEE-compliant is spread all the way down the value chain. It pays, therefore, to select your suppliers with care.
While there is no legal requirement for nongovernment entities to implement any type of empowerment policy, preferential procurement gives them an incentive to do so. However, this is the more complex aspect of BBBEE and is one of the hardest scores to calculate, because each supplier's individual BBBEE rating affects the amount of spend you can use to calculate your preferential points.
Simply put, the higher your supplier is rated, the more of the money that you spend with that supplier can be used to calculate your own BBBEE points. Businesses therefore need to establish their suppliers' BBBEE ratings as quickly as possible. The sooner you know this, the sooner you can include them in your scorecard calculations.
The following expenses CAN be claimed in terms of preferential procurement:
The following expenses CANNOT be claimed:
You can claim more than your actual spend with a supplier (up to 135%) if the company has a BBBEE rating of between 75 and 100.
Please login to comment on this article.
