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

Sector Codes

Defence Sector Code

10. Priority Elements, Sub-Minimum and Discounting Principle


10.1 The Priority Elements are as follows –


10.1.1 Ownership


The Sub-minimum requirement for Ownership is 40% of net value points.


10.1.2 Skills Development


The sub-minimum requirement for Skills Development is 40% of the total weighting points for Skills Development.


10.1.3 Enterprise and Supplier Development


The sub-minimum requirement for Enterprise and Supplier Development is 40% for each of the three categories, within the Enterprise and Supplier Development element, namely Preferential Procurement; Supplier and Enterprise Development.


10.2 Compliance with Priority Elements


10.2.1 A Large Enterprise is required to comply with all the Priority Elements;


10.2.2 A QSE is required to comply with Ownership as a compulsory element and either Skills Development or Enterprise and Supplier Development.


10.3 Discounting Principle Effect


10.3.1 Non-compliance with the 40% sub-minimum requirements of any of the priority elements, as per paragraphs 10.2.1 and 10.2.2. above, will result in the following outcomes for both Large Enterprises and QSEs;


10.3.2 The actual points scored by the Measured Entity and the consequent level that the Measured Entity would have achieved were it not for noncompliance with 40% sub-minimum requirements will be recognized by the Verification Agency ("the Recognition Level");


10.3.3 Notwithstanding the recognition in 10.3.2. above, the Measured Entity’s B-BBEE status level will be discounted by one level down until the next applicable verification period in which the Measured Entity can demonstrate compliance with the 40% sub-minimum requirements, at which point the Recorded Level will become the applicable ratings level for that Measured Entity in that verification period; and


10.3.4 The requirement to submit data to the Department of Labour under the Employment Equity Act 55 of 1998 is only applicable to "designated employers" who employ 50 or more employees. However, for the purpose of measurement in terms of this Sector Code, both Large Enterprises and QSEs that employ less than 50 employees are required to submit sufficient evidence for verification purposes.