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Defence Sector Codes Re-Published

April 16, 2019

Department of Defence and Military Veterans

16 April 2019

The Defence Sector Codes have been re-published.

The defence and military veterans department published the Codes of Good Practice on Broad-Based Black Economic Empowerment (BBBEE) in Government Gazette 42391.

The sector codes were published for comment in August last year.

They were first published in Gazette 42021 in November 2018.

The sector codes were drawn up in terms of the Broad-Based Black Economic Empowerment Amendment Act of 2013.

The sector codes are designed to provide the South African defence industry with a framework within which to implement BBBEE.

In particular, the codes also seek to encourage the participation of and growth of small, medium and micro enterprises in the defence sector, encourage technological innovation within the sector, expand local manufacturing capability, promote entrepreneurship and increase jobs in the sector.

In terms of priority elements, the sub-minimum requirement for ownership is 40% of net value points.

Large enterprises have to comply with the priority elements while a qualifying small enterprise is required to comply with ownership as a compulsory element and either skills development or enterprise and supplier development.

Enterprises with an annual total revenue of R5 million or less qualify as exempted micro-enterprises while entities with a total revenue of between R5 million and R50 million qualify as qualifying small enterprises provided its qualification does not arise as a result of circumvention of the relevant scorecard.

As regards the scorecard, ownership has a weighting of 25 points while enterprise and supplier development is allocated 40 points.

Companies will be required to procure at least 60% of products from local entities.

The re-published code creates a separate section on the vision and commitment and a rearranged section on localization.

The codes are now in effect.