Notable changes in the recently published Amended Construction Sector Codes (ACSC)

    Minister Rob Davies

    Following Minister Rob Davies’ publishing of the ACSC in December 2017, the construction sector now has an exclusive set of transformation standards to abide by.

    Transitional Period

    • It is noted in clause 10.2 that Construction Measured Entities that are in possession of valid B-BBEE certificates which would have been issued in terms of the Amended Generic Codes are free to retain their measurement under the Amended Generic Codes until the current scorecard expires. After the expiry date, the Amended Construction Sector Codes must be used irrespective of the financial period used in the previous audit.
    • 3 states that Measured Entities may still opt to redo the audit carried out for their current scorecard (which would have been completed under provisions of the Amended Generic Codes), in accordance with the provisions and principles of the Amended Construction Sector Codes. In this case, the audit will be performed for the same financial period as their current scorecard, using the measurement principles of the Amended Construction Sector Codes.

    To a large extent, there are no significant changes contained in this piece of legislation compared to contents of the draft that was published for public comment in October 2016. However, the following alterations can be spotted in the areas of the monitoring methodology, measurement and verification:

    Verification Reports

    Clause 1.5.4 makes it obligatory that Verification Agencies surrender Construction Sector BBBEE Certificates & Scorecards (Including Reports) to the Construction Sector Charter Council (CSCC). In turn, these records will be used to create industry empowerment & transformation reports for purposes of statutory reporting.

    Equity Equivalent Programmes (EEPs) & Local Content

    Clause 2.10.4 indicates that EEPs are recognized, in accordance with the Generic Codes. Although this is the case, the DTI and the CSCC will look into their adequacy in the construction sector per se and will give further direction in this regard within 12 months of the gazette.

    Scope

    Henceforth, Material Suppliers will be evaluated based on the Construction Sector Code, with clause 3.4 pointing out that they would be EXEMPTED upon proving compulsory legislative compliance and/or licensing requirements in a different sector.

    Verification & Affidavits of Certain Categories of Exempted Micro Enterprises (EMEs)

    In 3.6.2.4.1 (B) Affidavits and CIPC Certificates will ONLY be applicable to construction measured entities with an annual total revenue of R 1.8 million (and less) for Built Environment Professionals (BEPs ) and R 3 million (and less) for Contractors & Manufacturers and these will not be subject to discounting principles. All other EMEs – to the extent that they will have an opportunity to claim enhancement and will therefore be required to have a BBBEE certificate charged at a nominal fee.

    The new codes bring along with them an element of surprise for even companies that managed to achieve decent BBBEE Levels under the Generic Codes. We invite members to consult with MBA North so that through our services we can ensure that current good BBBEE Levels are maintained and bad ones improved.

    Although a Start-up Enterprise will be measured as an Emerging Micro Enterprise (EME) within the first year of its operations regardless of expected total revenue, the codes stipulate a few exceptions. When tendering for any contract with a value higher than R10 Million but less than R50 million, a start-up will be required to submit the Qualifying Small Enterprise (QSE) scorecard while the Large Enterprise scorecard applies for contracts of R50 Million and above. Thus, the Code expects much more compliance from a legitimate start-up the moment it secures a significant contract.

    Qualifying Small Enterprises (QSEs) that are measurable with the QSE scorecard are also required to comply with two priority elements. While Ownership is compulsory and a measured entity has an option of complying with either Skills Development or Preferential Procurement, Supplier Development is an additional element that QSEs will have to deal with.

    ‘MBA North is in a position to assist with BBBEE Consulting well in advance of your BBBEE certificate expiring. We urge members to monitor their verification periods and engage with us immediately so that we can assess current Transformation levels in comparison with their goals, given the stiff targets that are set out in the Code’, Kwakho Mpepho, ‘recommend solutions’.

     

    Author: K Mpepho

    ET &T Manger MBA North

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