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Broad Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Codes of Good Practice on Black Economic Empowerment

Code Series 500: Measurement of the Preferential Procurement Element of Broad-Based Black Economic Empowerment

Statement 500 : The General Principles for Measuring Preferential Procurement

5. Total Measured Procurement Spend

 

The following procurement is measurable within Total Measured Procurement Spend:

 

5.1) Cost of sales: all goods and services procured that comprise the cost of the sales of the Measured Entity;

 

5.2) Operational expenditure: all goods and services procured that comprise the operational expenditure of the Measured Entity;

 

5.3) Capital expenditure: all capital expenditure incurred by the Measured Entity;

 

5.4) Public sector procurement: all goods and services procured from organs of state and public entities listed in Schedules 2 and 3 to the Public Finance Management Act of 1998;

 

5.5) Monopolistic procurement: all goods and services procured from suppliers that enjoy a monopolistic position;

 

5.6) Third-party procurement: all procurement for a third-party or a client where the cost of that procurement is an expense recorded in the Measured Entity's annual financial statements;

 

5.7) Labour brokers and independent contractors: any procurement of the Measured Entity which is Outsourced Labour Expenditure;

 

5.8) Pension and medical aid contributions: payments made to any post retirement funding scheme or to a medical aid or similar medical insurer by a Measured Entity for its employees, excluding any portions of such payments which are a contribution to a capital Investment of the employee. The scheme or insurer must issue a certificate dividing payments between the capital investment portion and the balance to establish the amount that is measurable within Total Measured Procurement Spend;

 

5.9) Trade commissions: any commissions or similar payments payable by a Measured Entity to any other person pursuant to the business or trade of the Measured Entity;

 

5.10) Empowerment related expenditure: all goods and services procured in carrying out B-BBEE. The Total Measured Procurement Spend does not include the actual contribution portion recognised under Code series 600 or 700 but does include any expenditure incurred in facilitating those contributions;

 

5.11) Imports: all goods and services that are imported or procured from a non-South African source; and

 

5.12) Intra-group procurement: except as provided in statement 002, all goods and services procured from subsidiaries or holding companies of the Measured Entity.