How the Public Procurement Act Changes B-BBEE and Preferential Procurement Scoring

A New Model for Preferential Procurement

The Public Procurement Act 28 of 2024 repeals the Preferential Procurement Policy Framework Act (PPPFA) and, with it, the points-based preference system most South African bidders have built their pricing strategy around for years. In its place, the Act and its draft 2026 regulations introduce a threshold-based model of set-asides, pre-qualification criteria, and subcontracting conditions. This article sets out what that model looks like in practice, how it differs from the familiar 80/20 and 90/10 scoring formulas, and what it means for how B-BBEE status is actually used during evaluation.

For anyone who has spent years calculating price points against a competitor's B-BBEE

level, the shift is significant. The new framework does not abandon transformation goals, but it changes the mechanism from a blended score to a set of binary qualifying conditions tied to the size of the contract.

The Three-Tier Threshold Model

Rather than applying one preference mechanism to every contract regardless of size, the draft regulations scale the mechanism to the estimated value of the contract:

The categories referenced for set-asides and pre-qualification in the Act and draft regulations include black people, black women, women, youth, persons with disabilities, military veterans, and small enterprises operating within a defined geographic area. The draft regulations layer minimum allocation targets across a wider set of designated-group combinations set out in an annexure, reflecting an intent to target benefit more precisely than a single, broad B-BBEE score previously did. In practice, this means a procuring institution can specify, for a particular contract, exactly which combination of designated groups the set-aside or pre-qualification condition applies to, rather than relying on a generic points table.

What Happens to B-BBEE Certificates and Levels

B-BBEE documentation does not disappear from the process — it changes function. Under the PPPFA system, your B-BBEE level converted directly into preference points added to your price score, out of a maximum of 20 or 10 points depending on the applicable formula. Under the Public Procurement Act framework, ownership and designated-group status become the qualifying evidence for whether you fall inside a set-aside or meet a pre-qualification threshold, rather than a scoring input on a sliding scale.

Practically, this means a B-BBEE

certificate or sworn affidavit (for exempted micro enterprises) remains essential, but the question it answers shifts from 'how many points does this add' to 'does this qualify my business for this specific band of contract.' Businesses that were mid-tier on the old points scale but clearly fall within a designated category may find the new model more direct, since qualification is binary rather than incremental. Conversely, a business that relied on a strong B-BBEE level to offset a less competitive price under the old 80/20 formula may find that advantage no longer exists in the same form — under a set-aside, only eligible bidders compete at all, and price becomes the primary differentiator among them.

Practical Implications by Business Type

• Youth-owned businesses: set-asides below R20 million create a more direct route into smaller contracts than competing on a blended preference-points score. See our guide on building a tender pipeline as a youth-owned business for related detail.
• Women-owned businesses: the same set-aside and pre-qualification logic applies; positioning depends on accurately reflecting ownership structure in your CSD profile and company documents.
• Disability-owned businesses: explicitly named as a designated category for set-asides and pre-qualification, consistent with our existing guide for disability-owned businesses in government procurement.
• Larger, established suppliers bidding above R100 million: the compliance burden shifts toward structuring compliant subcontracting arrangements with designated-group subcontractors, rather than optimising a preference-points score.
• Mid-sized suppliers straddling the R20 million to R100 million band: pre-qualification means ownership structure now determines whether you are evaluated at all, so getting your CSD and company records accurate before bidding matters more than fine-tuning a price formula.

Compliance Verification Is Changing Too

The draft regulations point to a centralised supplier database intended to consolidate registration and eligibility information that is currently fragmented across the Central Supplier Database (CSD), departmental vendor lists, and municipal databases. Compliance verification is positioned as ultimately falling to the Auditor-General, rather than resting solely with the procuring institution that ran the tender — a structural check intended to reduce inconsistent self-verification across departments.

For bidders, the practical takeaway is that designated-group and ownership claims will need to hold up under a more centralised and potentially more rigorous verification process than under the previous, more fragmented system. Businesses that have been loose with how they describe ownership on tender documents, or that have let CSD records drift out of date, should treat this as the moment to tighten those records rather than waiting for a query from an evaluation committee.

How This Compares to the Old 80/20 and 90/10 System

Under the outgoing PPPFA framework, every tender above a minimum value used either an 80/20 or 90/10 split between price and specific goals, with B-BBEE level almost always the specific goal measured. A bidder with a weaker B-BBEE level could still win by pricing aggressively enough to close the points gap, and a bidder with a strong level could sometimes carry a materially higher price and still win on the combined score. That blended, continuous scoring logic is what the set-aside and pre-qualification model removes for lower and mid-value contracts: eligibility becomes a gate you pass or do not pass, rather than a lever you can pull harder or softer. Only once you are inside the eligible pool for a set-aside, or you have cleared a pre-qualification threshold, does price competition determine the outcome in something closer to the old sense.

Preparing Your Business for the Transition

Whichever side of the threshold your business typically sits on, there are concrete steps worth taking before the regulations are finalised rather than after. Start by mapping your last two years of tender submissions against the three value bands described above, so you know in advance which mechanism will most often apply to your bids. Review your company's ownership records, shareholder agreements, and CSD profile for accuracy, since these documents will carry more direct weight under a qualification-based model than they did under a scoring model where a strong price could partially offset a weaker B-BBEE level. If your business regularly bids above the top threshold, begin building relationships with credible designated-group subcontractors now, rather than searching for a compliant partner under time pressure once a large tender closes. And if you rely on an EME affidavit rather than a verified certificate, make sure it is renewed annually and reflects your actual, current turnover and ownership position, since inaccurate self-declarations carry real legal risk regardless of which procurement framework is in force.

What This Means Right Now

These mechanisms are described in draft regulations that were still open for public comment at the time of writing, with the comment period extended to 15 July 2026, and the relevant sections of the Act have not yet fully commenced. Current live tenders continue to apply existing preferential procurement rules under the PPPFA framework. The shift described here is what to prepare for, not what applies to a tender closing this month. Businesses should read this as a planning document: understand which contract-value band your typical bids fall into, get your B-BBEE and ownership documentation accurate now, and watch National Treasury's official channels for the finalised regulations and commencement dates rather than acting on the draft as though it were already in force.

Sources: Public Procurement Act 28 of 2024, National Treasury draft General Public Procurement Regulations 2026, Lexology commentary on the draft Public Procurement Regulations, smartprocurement.co.za summary of the new procurement regime.