The first step in calculating the score achieved under the Preferential Procurement element is to calculate Total Measured Procurement Spend.
Total Measured Procurement Spend essentially measures the relevant total spend by the measured entity, against which the Preferential Procurement Scorecard targets are benchmarked.
Total Measured Procurement Spend is calculated by including the ‘inclusions’ and excluding the ‘exclusions’.
A Verification Agency will typically utilise the relevant figures as contained in the company’s audited financials in this regard.
INCLUSIONS:
The following expenditure will be included in Total Measured Procurement Spend, all of which are extracted from the company’s audited financials.
- ie - All goods and services procured that comprise the cost of sales of the measured entity
- Plus closing inventory
- Less Opening Inventory
- ie - All goods and services procured that comprise the operational expenditure of the measured entity
The Codes specifically include the following:
- All capital expenditure incurred by the measure entity
- All goods and services procured from subsidiaries or holding companies of the measured entity.
- All finance costs
Additional Specific inclusions:
The Codes specifically require the following types of expenditure to be included, and must be recorded within Costs of sales, operational expenditure, capital expenditure or Other fields:
- all goods and services procured form organs of state and public entities
- Where procurement is form a local government authority which is merely a reseller of the service, the B-BBEE credentials of the primary supplier of the service will be utilized.
EXCLUSIONS:
The following expenditure will be excluded in Total Measured Procurement Spend, all of which are extracted from the company's audited financials.
- Any amount payable that represents a lawful rate or tax
- Any amount payable to an employee as an element of their salary or wage or any emolument or similar payment paid to a director.
- Depreciation on assets can be excluded. (Included within Cost of Sales and Operating expenditure).
- Imported Capital Goods:
- Certain imported capital goods will be excluded, as follows:
- Imported goods or components for value added production in SA:
- Imported goods or components where:
- There is no local production of such goods or components,
- Importing those components promotes further value-added production in SA
- Other Imported Goods:
- Certain other imported goods will be excluded, as follows:
- Imported goods or components for value added production in SA:
- Imported goods or components where:
- There is no local production of such goods or components, including:
- by brand.
- by technical specification.
Enterprise and Supplier Development Plan
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For the Exclusion of imports measured entities are encouraged to develop and implement Enterprise Development and Supplier Development plans for imported goods and services. |
Such plan should include:
Designated Sectors
The exclusion of import does not apply to imports in the Designated Sectors and products for local production.
The current designated sectors are:
Empowerment Related Procurement
- These are the Enterprise and Supplier Development and Socio Economic Development contributions made by your business. (Recognised under code series 400 or 500).
- third party procurement where the cost of such is NOT recorded in the measured entity’s annual financials
- Any losses or write offs associated with the sale of assets
- Any losses associated with forex.
Other:
The Other field can be utilized to exclude any expenditure or adjustments not specifically included in the above fields. These must be recorded within the Other field:
Additional Specific exclusions:
The Codes specifically require the following types of expenditure to be excluded,
Preferential Procurement Calculator
What is Total Measured Procurement Spend?