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

Amended Codes of Good Practice (2017)

Amended Code Series CSC000: Framework for Measuring Broad-Based Black Economic Empowerment in the Construction Sector

Statement CSC000: General Principles and the Large Enterprise Scorecard

2. Key Measurement Principles

 

2.1 The fundamental principle for measuring B-BBEE compliance is that substance takes precedence over legal form.

 

2.2 In interpreting the provisions of the Sector Codes, any reasonable interpretation consistent with the objectives of the B-BBEE Act as amended and the B-BBEE Strategy must take precedence.

 

2.3 The basis for measuring B-BBEE initiatives under the Sector Codes:
2.3.1 For the ‘Ownership’ and ‘Management Control’ elements it is the B-BBEE compliance of the Measured Entity at the Date of Measurement; and
2.3.2 For the ‘Skills Development’, ‘Enterprise and Supplier Development’ and ‘Socio- Economic Development’ elements, it is the B-BBEE compliance of the Measured Entity over the Measurement Period.

 

2.4 Any misrepresentation or attempt to misrepresent a Measured Entity’s true B-BBEE Status is a criminal offence and will be dealt with in accordance with the provisions as set out in the B-BBEE Act as amended, and may lead to the disqualification of the entire scorecard of the entities concerned.

 

2.5 Initiatives which split, separate or divide a Measured Entity with the intent of ensuring eligibility as an Exempted Micro-Enterprise, a Qualifying Small Enterprise or a Start-Up Enterprise will constitute an offense and will be dealt with in accordance with the provisions as set out in the B-BBEE Act as amended.

 

2.6 Any representation made by an Entity about its B-BBEE compliance must be supported by Suitable Evidence or Documentation. A Measured Entity that does not provide Suitable Evidence or Documentation supporting any initiative will not receive any recognition for that initiative.

 

2.7 Wherever a Standard Valuation Method applies to measuring an indicator, the same standard should apply, as far as reasonably possible, consistently in all other applicable calculations in this statement.

 

2.8 The measurement of Joint Ventures will be done as follows:

 

2.8.1 Unincorporated Joint Ventures are required to compile a consolidated verification certificate. A consolidated verification certificate will consolidate the scorecard points scored by each of the joint venture partners in accordance with paragraph 2.8.2 below as if those Measured Entities were a single Measured Entity.
2.8.2 The consolidation of scorecard points shall be based on a weighting in accordance with the joint venture agreement relevant to the specific joint venture. Therefore, should two companies enter into an Unincorporated Joint Venture their respective scores will be weighted according to their proportionate Economic Interest rights in the joint venture and added together for a combined score.

 

2.8.3 QSE’s that are less than 51% Black Owned must be measured in terms of the QSE Scorecard. Such an Entity must use its score in terms of the QSE Scorecard to calculate the consolidated score.

 

2.8.4 QSE’s that are at least 51% Black Owned or 100% Black Owned and all EME’s are awarded automatic B-BBEE Status Levels without having achieved a specific score.

Therefore in order to appropriately weight such an entity’s contribution to the B-BBEE Status of a JV the following scores are imputed to them based on their respective automatic B-BBEE Status level as enhanced or discounted:

 

2.8.4.1 a Level 1 Contributor qualify for a score of 105 points;
2.8.4.2 a Level 2 Contributor qualify for a score of 97.5 points;
2.8.4.3 a Level 3 Contributor qualify for a score of 92.5 points;
2.8.4.4 a Level 4 Contributor qualify for a score of 85 points;
2.8.4.5 a Level 5 Contributor qualify for a score of 77.5 points;
2.8.4.6 a Level 6 Contributor qualify for a score of 72.5 points.

 

2.8.5 Where all the partners in the joint venture are Empowering Suppliers the Unincorporated Joint Venture will also qualify as an Empowering Supplier. If not, the compliance of the Unincorporated Joint Venture with the Empowering Supplier requirements must be measured as though it is a single Measured Entity with each partner contributing, to the categories of measurement for Empowering Supplier status, in proportion to its share in the joint venture.

 

2.8.6 If an incorporated joint venture is required to be formed after the commencement of a contract, the unincorporated joint venture scorecard will be applicable for the first year of the contract whereafter a scorecard will be required for the incorporated entity.

 

2.8.7 In respect of public sector procurement an entity may not sub-contract more than 25% of the value of a contract to another entity that does not have an equal or better B-BBEE status level than the entity awarded the contract unless the work is sub-contracted to an EME that has the capability to execute the work and the work is below the EME threshold. In such cases in respect of public sector procurement where more than 25% of the project costs flow to the other entity that does not have an equal or better B-BBEE status level, joint ventures or consortia should be formed with a combined scorecard for all entities in the joint venture or consortium, in line with applicable regulations.

 

2.9 Where a matter is not expressly dealt with in terms of this Amended Construction Sector Code, then the Generic Codes of Good Practice as amended will take precedence. Otherwise in all other matters this Construction Sector Code will take precedence.

 

2.10 To the extent that the following statements contained in the Original Codes of Good Practice Gazette No. 29617, as amended from time to time such as by Government Gazette No. 38766 of 6 May 2015, do not contradict a provision of this Construction Sector Code, they are expressly incorporated into the Amended Construction Sector Code as per the table below:

 

 

Statement

Description

2.10.1

004

Scorecards for SPECIALISED Enterprises

2.10.2

005

BROAD-BASED BLACK ECONOMIC EMPOWERMENT

VERIFICATION

2.10.3

102

RECOGNITION IN THE SALE OF ASSETS

 

2.10.4 Although Equity Equivalent Programmes (EEPs) are recognised in line with the provisions of statement 103 of the Generic CoGP, the CSCC will, together with the DTI, in consultation with the relevant forums representing multi-national enterprises, investigate the acceptability and effectiveness of these in the construction sector. Read with the provisions of clause 1.5.6, the CSCC and the DTI will, within 12 months of the Amended Construction Sector code being gazetted, issue a PRACTICE NOTE to clarify the application of the EEP.

 

2.11 Measured Entities are only measureable against their South African Operations. This applies to the measurement of all the elements and indicators of the scorecard.

 

2.12 The Amended Construction Sector Code distinguishes, in certain instances between Built Environment Professionals (BEP) and Contractors in respect of targets, weightings and methodology. A Measured Entity is either measureable against the targets and weightings of a BEP or a Contractor and cannot apply the set of targets, weightings and methodology applicable to BEP’s in the case of one element and the set applicable to Contractors in the case of another element.