Joint Ventures - Important Tool in the Tender Process
On 1 May 2015 the Amended B-BBEE Codes of Good Practice came into effect. These Amended Codes will have a major impact on the B-BBEE Scores of all businesses that participate in B-BBEE in South Africa. The fact of the matter is that the B-BBEE scoring levels have changed drastically. If a company does not have any sort of Black Ownership it is going to be very difficult to achieve a decent B-BBEE Score.
In the Amended B-BBEE Codes of Good Practice the Ownership Element Score has been adjusted from 20 points to 25 points. It is widely accepted that on the "old Codes" a good B-BBEE score was between 65 to 75 points. Businesses that achieved such a score usually got a Level Four B-BBE Score which in turn meant that these businesses had a 100% Procurement Recognition Level. A Level Four Procurement Recognition Level was great and everybody was happy.
The problem is that due to new concepts in the Amended B-BBEE Codes such as Priority Elements and higher scoring levels, it will become a challenge to reach the same recognitions levels as in the past. This is where Joint Ventures will play a major role in ensuring that good B-BBEE Scores can be achieved by businesses.
One of the most important instances where B-BBEE Scores are of utmost importance is in the tender process. It is common knowledge that the better the B-BBEE Score, the better your chances of winning a tender. Government Entities must use the Preferential Procurement Point System (either the 80/20 or 90/10 system) to calculate which tender response will be awarded the tender - if you do not have a good B-BBEE Score and if it is a close race, you are going to lose out with a low B-BBEE Score.
Keeping all the above in mind, Joint Ventures can be a great tool to use to increase B-BBEE Scores. Remember that when you tender through a Joint Venture you must submit a Consolidated Joint Venture B-BBEE Certificate. If you have the correct Joint Venture partner, with a good B-BBEE score, the overall score that you will achieve in the Preferential Procurement Point System can be much higher than going into the tender alone.
How2Tender's workshops provide much insight into Joint Ventures and much more. Please visit our website for more details www.how2tender.com or email email@example.com should need any assistance in this regard.