Amended regulations to the Preferential Procurement Policy Framework Act (PPPFA), Act 5 of 2000, which came into effect in December 2011 empower the Minister of Trade and Industry to use government procurement to ensure achievement of key industrial policy objectives, namely, increased local production. These regulations have application to government procurement for all
organs of state as contemplated in section 1 (iii) of the PPPFA, and all public entities listed in Schedules 2, 3A, 3B, 3C and 3D to the PFMA and municipal entities.
The implication of the new regulations for businesses, local and foreign, is that all suppliers in the designated sectors will have to meet the set minimum local content requirements if they are tendering for goods, works and service contracts within the public sector. Suppliers are required to submit both a ‘declaration of local content’ and proof of verification (certificate/report from an accredited verification authority).
The SABS, as the national standards body, has published the approved Technical Specification (SATS 1286) for determining local content. Businesses affected by the procurement regulations will have to apply the SATS 1286 formula when calculating and declaring local content.
The South African Bureau of Standards is an agency of the dti with a mandate for standards, assessment and certification. The SABS has access to expertise across a wide range of industrial areas with engineers and technical experts located across ninety test laboratories in fields such as electro-technical, food & health, transportation, mining & minerals and materials (piping, plastics, and textiles). Eighty percent of SABS business is in conformity assessment services, thus the SABS works directly with industry and has knowledge of local manufacturers in the various industry sectors designated for local content. The SABS, as a dti agency, has therefore been appointed the Local Content Verification Agency.
Regular updates on new designations are communicated to the public by the dti. For the latest list of designated sectors,
click here
A crucial aspect of Local Content is its verification, and SABS is the verification agency for Local Content in South Africa in terms of the amended regulations to the Preferential Procurement Framework Act, Act 5 of 2000.
The SABS conducts its audit in two parts. One part involves the verification of transactional documentation related to the purchasing and manufacturing costs of the product to ascertain if they meet the required local content threshold. The second part of the verification process is an onsite technical verification to confirm the existence of necessary infrastructure, technical expertise and
the completeness of materials used in the production process. Should the audit successfully verify the Local Content requirement against the threshold, the SABS issues a Local Content Verification Certificate. Ongoing surveillance and “spot checks” by SABS throughout the duration of the contract ensures that the Local Content requirement is adhered to by the supplier.
Local Content Verification Process
- The dti forwards the winning bidder’s information to SABS
- SABS, the dti & procuring organ of state scopes the verification process
- Quotation process with the winning Bidder
- Verification audit process
- SABSs Approvals Board – Verification decision
- Local Content Certificate creation
- Data base entry and maintenance
Download the SABS Local Content application form
here.
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