Implications of the new Construction BEE Charter on construction material suppliers

"My company supplies construction materials and in the past I have always been verified under the general BEE Codes with my BEE verification. Will this still be the case in terms of the new Construction BEE Charter? If not, what effect will this have on my business?”

The draft Construction BEE Charter (“Construction Charter”) was published for public comment in October 2016 with publication of the final version expected soon. The draft Construction Charter makes it clear that construction material suppliers will now have to be verified under the Construction Charter (when it is finally published) and not under the general BEE Codes of the Department of Trade and Industry, as these suppliers have done in the past.

It is anticipated that suppliers of construction materials may be in for a challenge in having to comply with the Construction Charter based on the provisions of the published draft. The draft Construction Charter contains a number of provisions which require the reporting entity to report on their compliance with targets relating to the number of registered Black professionals employed by the entity. Although these provisions should not be too problematic for other entities which fall under the Construction Charter, such as engineering and architecture firms who require registration with their professional bodies, no professionally qualified persons are in essence required to operate a material supply company. Yet it does not at present appear from the draft, that these suppliers will be able to sidestep compliance with these provisions.

This requirement affects also the Management and Skills Development elements, both of which now contain targets relating to professional registration. A construction material supplier such as yourself will therefore have to take cognisance of this new requirement, as non-compliance could in our estimation result in a loss of up to two BEE levels if these provisions are not met.

When one considers that your BEE level is more important than ever for government tenders under the new Preferential Procurement Regulations, a potential loss of two BEE levels is a distinct disadvantage faced by construction material suppliers and impacting on their competitiveness. Whether these provisions will remain will only be clear once the final Construction Charter is promulgated, but in the interim it would be wise for construction material suppliers to monitor the situation and commence their planning for compliance, should these provisions remain in the final Construction Charter.

April 5, 2017
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