How to evaluate a Level 1 B-BBEE claim.
Most procurement officers see “Level 1 B-BBEE” on a tender response, tick the procurement-points box, and move on. That works most of the time, and then once a year you receive an audit query about a Level 1 claim that turns out to be soft, and the conversation gets uncomfortable. Five checks, completed in under fifteen minutes, separate genuine Level 1 contributors from paper compliance.
1. Check the affidavit format and signature
Companies under R10 million turnover qualify as Exempted Micro Enterprises (EMEs) and may submit a sworn affidavit rather than a verification certificate. Companies between R10 million and R50 million turnover are Qualifying Small Enterprises (QSEs); those with 100% black ownership may also use the affidavit route. Larger companies, or those without sufficient black ownership, need a verification certificate from a SANAS-accredited B-BBEE verification agency.
The first check is whether the document type matches the company size. Open the affidavit. Confirm the prescribed format from the Department of Trade, Industry and Competition (the same form across the country, identifiable by the “Annexure CC2.1” reference, or the equivalent for the relevant sector code). Confirm a commissioner of oaths has signed and stamped it. Affidavits without a commissioner signature are not affidavits.
An affidavit produced on the wrong template, or unsigned by a commissioner, is the most common quiet failure in B-BBEE claims. It rarely indicates fraud. It usually indicates a company that downloaded a template from a vendor newsletter rather than working through the formal route.
2. Read the turnover threshold against the document type
An affidavit is only valid for the EME or 100% black-owned QSE categories. If the company has turnover above R50 million, an affidavit is not the right document, regardless of what it claims. The valid alternative is a verification certificate from a SANAS-accredited agency. Both the affidavit and the verification certificate should state the turnover band; if the document doesn’t state it, ask.
A common scenario: a growing company crosses the R10 million threshold mid-year and continues to submit the EME affidavit it used last year. The affidavit is technically expired the moment the turnover crossed the threshold. The fix is a verification certificate, which costs the company between R8,000 and R25,000 and takes four to six weeks. The procurement officer cannot fix this for the supplier, but the procurement officer should know to ask.
3. Apply the correct sector code
The generic Codes of Good Practice are not the only ones that apply. Sectoral codes exist for ICT, construction, finance, transport, agriculture, property, tourism, marketing, integrated transport, forestry, and several others. The sector codes adjust the points scheme to suit the realities of that industry. ICT, for example, has its own sector code (gazetted in 2016 and amended in 2022) that includes targets for new entrants, mentoring, and small-supplier development specific to the technology services market.
If the supplier is an ICT services company, the affidavit or verification certificate should reference the ICT Sector Code, not the generic codes. Same logic for construction (CIDB construction sector code), finance (Financial Sector Code), and so on. A company claiming Level 1 under the generic codes when it should be measured under a sector code may legitimately be Level 1 either way, but the procurement officer can ask the supplier to confirm.
4. Trace the ownership claim to identifiable people
“100% black-owned” and “51% black-women-owned” are real claims with real arithmetic behind them. Ask the supplier for the shareholders’ register, or for a CIPC-extracted ownership confirmation. Match the names against the affidavit’s claims. The numbers should reconcile to the second decimal.
The two patterns to watch for: (a) ownership claims that round up generously (a 49.5% claim becoming “effectively 51%” in the narrative), and (b) recently-restructured ownership where a non-black owner’s shares have been transferred to a related party. The Codes of Good Practice have anti-avoidance provisions for both patterns, and a B-BBEE verification agency would have caught them. An affidavit, by definition, has not been independently verified.
This check takes longer than the others, perhaps eight to ten minutes if you have the registers in front of you. Run it on a sample of tender responses each quarter rather than every submission, and you build pattern recognition over time.
5. Verify the recognition arithmetic
A Level 1 contributor scores at least 100 points on the B-BBEE scorecard and is awarded 135% procurement recognition under the Preferential Procurement Regulations 2017 and the equivalent 2022 update. Procurement officers use this 135% multiplier when calculating the value of a supplier’s spend against the spending company’s preferential procurement target.
The arithmetic: if a Level 1 supplier invoices R100,000, the spending company recognises R135,000 against its own preferential procurement scorecard. A Level 2 contributor (85 points) gives 125% recognition. Level 3 gives 110%. Levels below 3 give progressively less, down to zero for a non-compliant contributor.
The verification check is simple: confirm the percentage matches the level claimed. Level 1 maps to 135%, never to 110% or 125%. A supplier claiming Level 1 with 110% recognition has either mis-stated the level or mis-stated the recognition percentage; either way the document needs to be queried before it goes into the bid file.
What this doesn’t cover
The five checks above evaluate the validity of the claim as filed. They don’t evaluate the substance of the transformation behind it. A Level 1 contributor with 100% black ownership but no operating business, no client base, and no employees is still a Level 1 contributor on paper. The Department of Trade has anti-fronting provisions for shell companies, but enforcement is patchy and slow.
The remedy for substance is the rest of the tender evaluation. References, financial statements, employees, premises, registered business activity, CIPC age, CSD activity, and the supplier’s actual history of delivering work to other clients. A genuine Level 1 contributor has a track record. A paper Level 1 contributor often doesn’t.
Use the B-BBEE check for what it’s for: confirming the procurement-points claim. Use the rest of the evaluation for what it’s for: confirming that the company can deliver the work. The two checks reinforce each other but answer different questions.
This piece is a summary of practice notes used inside Sgananda Group when reviewing bid responses for advisory clients. It is not legal or compliance advice. Where a specific claim raises a concern, refer to the Department of Trade, Industry and Competition, or to a SANAS-accredited B-BBEE verification agency, for the formal position.
