Change in BEE regulations on Project Hotel tender

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Shipyards keen on being chosen to build the SA Navy’s new hydrographic vessel were this week informed a mandatory black economic empowerment (BEE) regulation has been removed from the tender documents.

The announcement is contained in a letter addressed to “Potential Offerer” from Armscor’s Procurement Secretariat. It gives no explanation of why the 25% mandatory BEE requirement reflected in paragraph 16.1 of the state’s defence and security procurement agency’s KD17 offer document has been removed.
“I see it as a slap in the face of the blue economy initiative announced last year by President Jacob Zuma,” a senior shipyard executive said on condition of anonymity. He asked not to be named because, in addition to the hydrographic vessel (Project Hotel), Armscor is also seeking bidders to build in- and offshore patrol vessels under Project Biro this year.
“It could affect the status of the company I am part of as a potential shipbuilder for the Navy,” he said adding the company had spent “a lot, in time, effort and money” to reach the point where it was now 70% black owned.
“The company did what government asked of it. Now it appears BEE is no longer a requirement. Does this mean the local shipbuilding industry, which was only last year declared to be a strategic sector of economic activity, no longer has to comply with government’s black empowerment regulations.
“I can understand from a company point of view, if one decides not to go the BEE route. Well and good, it means that company is not keen on getting government business. From our point, we went the BEE route because we want to create jobs and keep people at work.
“We are South African and proud of it. This (the Armscor letter) is a shock,” he said.

He said the 60% local content stipulated for Project Hotel would be reached but the number of jobs would “sadly” be significantly less in the shipbuilding sector as a result of the removal of the BEE requirement.



Its removal comes two weeks after tender submission date was extended by two months to allow bidders to finalise what Armscor termed “a complex tender”. Potential bidders originally had to submit tender documentation by April 24.