BEE clause in SAA funding notice raises red flag. Questions have been raised about the legality of part of SAA’s funding request for R16bn in the open market.
In a notice published in a Sunday newspaper, cash-strapped SAA has turned to banking and non-banking financial institutions to raise R16bn to meet its working and capital expenditure requirement as well as to consolidate its current debt portfolio.
In the notice SAA indicated that preference will be given to bidding entities “which are 51% or more black owned and 30% or more black women owned; youth owned; companies owned by disabled persons; military veterans and located in rural areas”.
A former employee of SAA with inside knowledge – but who preferred to remain anonymous – told Fin24 that there are concerns about the legality of this clause in the SAA notice.
According to this source, Treasury and another government department have already in the past pointed out to SAA that such a requirement is not legal. He also added that, in his view, SAA can forget about obtaining the R16bn funding it asks for in the notice without government guarantees.
The Preferential Procurement Policy Framework Act allows for only a maximum 10% weighting for black empowerment and does not permit non-price criteria other than empowerment to be used in scoring tenders, Business Day reported earlier this year.
At that time SAA had indicated that, for tender purposes, military veterans, rural dwellers, disabled people and black women were to be given preference alongside black-owned companies to supply SAA with jet fuel, uniforms and stationery.
In July 2015 it also came to light that an approach was made by an SAA director requesting that Bidvest transfers 30% of its aircraft-toilet-cleaning subsidiary business to an SAA-nominated black-owned small business. This was declined by Bidvest, City Press reported at the time.
In June this year Treasury did indeed publish new draft preferential procurement guidelines that will see 30% of all large government-issued contracts set aside for small and black-owned companies through subcontracts. This was after President Jacob Zuma made a similar proposal in his 2015 State of the Nation Address.
When asked about the legality of the stipulation in the funding notice that preference will be given to bidding entities “which are 51% or more black owned and 30% or more black women owned; youth owned; companies owned by disabled persons; military veterans and located in rural areas”, SAA spokesperson Tlali Tlali referred Fin24 to Treasury to clear it up.
In response to the same question, Treasury told Fin24 the amended preferential procurement regulations have not been promulgated yet.
“Therefore, they are not yet applicable until promulgated,” Treasury said