THOUSANDS of black business owners may find themselves losing out on tenders when new government procurement regulations take effect in just under four months.

The new Preferential Procurement Policy Framework Act (PPPFA) regulations, which were released in June and will come into force on December 7, will make it mandatory for those that tender for government contracts and want to score preference points, to include a verified BEE scorecard with their bid. Those business owners that don’t submit a verified BEE scorecard will forfeit the 10 or 20 preference points.

The new rules won’t affect businesses with an annual turnover of less than R5 million, classed as Exempted Micro Enterprises (EME). These entities won’t need to get a rating, just a letter from their accountant specifying that there annual turnover falls below this threshold.

Under the new regulations 20 preference points will be set aside for tenders that fall below R1 million (up from the present threshold of R500 000). For those tenders above R1m, 10 preference points will be set aside.

Currently when a business bids for government work, preference points under the PPPFA are awarded according to the percentage of ownership black people, women and disabled people have in the company putting in a tender. But the new regulations will calculate a bidder’s preference points according to the enterprise’s BEE level, which is based on the number of BEE points an enterprise notches up.

It means that business owners will now have to adhere to at least four of the seven elements (if they have a turnover of between R5m and R35m) of the BEE scorecard.

This will go some way to rooting out fronting, as will a stipulation in the regulations that a bidder cannot be awarded preference points if they intend to subcontract 25% or more of a contract to a firm with a lower BEE level than theirs.

The regulations also specify that the Minister of Trade and Industry may designate certain sectors or activities where the award of the tender is conditional on a certain percentage of the tender being reserved for local content and production.

But how many black business owners will be aware of the need to get a scorecard when December 7 comes along?

Chris van Wyk, the chairperson of the Association of BEE Verification Agencies (Abva) believes that there are about 250 000 suppliers that don’t have a verified BEE rating (lower than the Department of Trade and Industry’s estimate of 800 000) and that about two thirds of these suppliers are EMEs.

It means that anything between 150 000 and 600 000 will need ratings if they want to score preference points. One wonders whether the 70 verification agencies will be able to handle such a number in the given time.

Particularly worrying is that Van Wyk admits that number of enquiries from businesses haven’t exactly been what many in the industry have expected. But he believes that many suppliers would by now have been alerted to the new rules by the various tender boards.

Yet what most black business owners will be concerned about is that a 100% white-owned businesses will in some cases be able to score more preference points than black-owned businesses – because the calculation of these points no longer hinges solely on a company’s ownership. This, more than the R4 500 to R10 000 it costs for a verified rating, will be a sore point for many black entrepreneurs.

But if the country is to move away from the entitlement and tendertrepreneurship culture that has taken hold of the country in recent years, all South Africans will have to contribute to change – not just large companies but smaller, black-owned ones too, if we are to grow to become the great country we are destined to be.