PPPFA : #80/20PrinciplesMustFall



Legislation_Panel_Discussion_969x768.JPGSouth Africa currently faces many problems and government must stop applying quick fixes and actually investigate the root of the problem and address it. This was the consensus at a Smart Procurement World Western Cape panel discussion.

“PPPFA must not fall, but the principles of 80/20 and 90/10 must fall, simply because the framework is wrong. This kind of framework is costing government a lot of money that it does not have” said Kamogelo Mampane, Chief Executive Officer, TK Global Experts.


“However, you cannot fix PPPFA, as there are fundamental problems in the Acts. For example, if government applies a 50/50 formula for a bottle of water costing R3.50 it means government can pay 60% more for the value of the water bottle and that is wrong. That is why PPPFA cannot be fixed,” explained Mampane.

“A solution to this problem is that government should not combine social imperatives with price. Decouple social imperatives and social adjectives from price,” expressed Mamapane

There is more sense in the new Broad Based Black Economic Empowerment (BBBEE) than in the PPPFA, said Fikile Khumalo, Director Material Governance, Risk and Compliance for Ministry of Defence.

“The new BBBEE Codes focus on ownership, supplier development and enterprise development (ED) in support of start-up organisations. However, the focus should introduce financial guarantees to small, medium and micro enterprises (SMMEs),” said Khumalo.

She stated that requesting an SMME to provide a bank sheet and cash flow, when doing business with established organisations, automatically creates a barrier to entry for smaller companies.

Furthermore, when looking at contract terms of reference, government states that a company must have 10 to 15 years’ experience which, in most cases, cuts out SMMEs who are trying to break into industry and defeats the purpose and ideals that are captured in the National Development Plan, said Khumalo.

“National Treasury and Department of Trade and Industry must work hand in hand to address these imbalances. Government needs to focus on enhancing current regulations rather that introducing new ones because it seems like everything is over regulated, ”noted Khumalo.
Mampane and Khumalo were part of a private and public sector panel discussing how to improve the public sector’s procurement productivity through strategic growth and value.

Ian Hendry, Corporate Card Business Development, Nedbank Corporate Card commented on providing financial guarantees for SMME: “If smaller companies are quickly paid for their work, especially when dealing with the public sector, it will help with their cash flow and enable them to be more flexible. The public sector can learn from the lessons learned and earned by the private sector in this regard.”

Manenzhe Manenzhe, Chief Financial Officer, Parliament, when asked how parliament marries procurement service delivery with socio-economic development plans, said that parliament, in examining legislation, first looks at the legislation’s initial objectives, what a certain law hopes to achieve, and then “filters” the priorities. In terms of PPPFA and BBBEE, Manenzhe said the Acts serve government and national priorities and must first be understood in those frameworks. 

Tasneem Rakiep, Procurement Manager, Western Cape Provincial Governance said that procurement individuals need to adapt and deliver. Where one can create uniformity within their working environment then they should do it.

Khumalo added that governance, risk and compliance at Ministry of Defence is currently struggling with a requirement to account for 30% of spent with SMMEs. “The central supplier database coming into effect on 1 April does not give a clear indication of whether a supplier is an SMME or corporate” said Khumalo.


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