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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Sector Codes

Defence Sector Code

16. Elements of the Defence Sector Code: Large Entities Scorecard

16.5 Localisation

 

16.5.1 One of the most important mechanisms for growing a sustainable defence industry is the stimulation and expansion of South African enterprises and improving their global competitiveness.

 

16.5.2 Stakeholders therefore commit to:
16.5.2.1 procure at least 60% of Defence Matériel from Local Enterprises.
16.5.2.2 provide support for and procurement from Local Enterprises that manufacture Defence Matériel in South Africa; and
16.5.2.3 provide support for Local Enterprises that introduce new locally developed technology that is not older than 24 (twenty-four) months in the SADI.

 

16.5.3 In the event that it is not practically achievable to procure 60% of Defence Matériel from Local Enterprises, Measured Entities doing business with Organs of State and Public Entities must submit a written request for exemption to Armscor or the Department of Defence as may be applicable which may at their sole discretion exempt such Measured Entities from compliance with this provision.

 

16.5.4 All Measured Entities that are granted an exemption must develop and implement an Enterprise and Supplier Development plan in addition to any other contributions in terms of the Enterprise and Supplier Scorecard in this Sector Code.

 

16.5.5 Measured Entities that do not do business with Organs of State or Public Entities may request such exemption from the dti which may at its sole discretion exempt such Measured Entities from compliance with this provision.

 

16.5.6 Any written request by a Measured Entity for exemption from compliance with the provisions of paragraph 16.5.2.1 must be accompanied by the following:
16.5.6.1 verifiable evidence that there is no existing local production of such Defense Matériel;
16.5.6.2 evidence that importing Defense Matériel will further promote valueadded production within South Africa;

 

16.5.7 All Measured Entities that are granted an exemption must develop and implement an Enterprise and Supplier Development plan in addition to any other contributions in terms of the Enterprise and Supplier Scorecard in this Sector Code.

 

16.5.8 Any Enterprise and Supplier Development plan that an exempted Measured Entity develop in terms of paragraph 16.5.7, should include:
• Clear objectives
• Priority interventions
• Key performance indicators; and
• A concise implementation plan with clearly articulated annual milestones.

 

16.5.9 Measured Entities that are exempted in terms of this paragraph 16.5 and are fully compliant with the Enterprise and Supplier Plan in terms of paragraph 16.5.8 are deemed to have complied with the relevant provision of the Localisation Scorecard and are therefore entitled to the 6 Weighting Points.

 

Localisation Scorecard

 

B-BBEE

Element

Indicator

Description

Weighting

Points

Compliance Target

Localisation

 
1. Procurement of Defence Matériel produced and/or manufactured in South Africa by Local Enterprises

6

60%
2. Procurement from Local Enterprises that introduced new locally developed technology in the SADI that is not older than 24 months

2

60%
3. Procurement of technologies that are developed in South Africa by Local Enterprises from intellectual property owned by such Local Enterprises or technologies that are developed in South Africa by Local Enterprises from intellectual property licensed thereto by Local or Foreign Enterprises

2

60%

Total

10 Points