The 80/20 Preference System: How Points Are Calculated Under the 2022 PPPFA Regulations
A practical guide to the 80/20 and 90/10 preference point systems under the 2022 Preferential Procurement Regulations — how scores are calculated, B-BBEE points tables, and worked examples.
What Is the Preference Points System?
The preference points system is the mechanism through which South Africa’s government procurement gives weight to B-BBEE transformation beyond price alone. It is governed by the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA) and the Preferential Procurement Regulations, 2022 (Government Notice R1350, published 16 January 2023, effective 16 January 2023).
The 2022 Regulations updated and in some respects simplified the previous 2017 Regulations, while maintaining the fundamental 80/20 and 90/10 scoring architecture.
Two Systems: 80/20 and 90/10
The system you use depends entirely on the estimated contract value:
| Estimated Contract Value | System | Points for Price | Points for B-BBEE |
|---|---|---|---|
| R30,000–R50 million | 80/20 | 80 | 20 |
| Above R50 million | 90/10 | 90 | 10 |
Below R30,000, preference points are not applied — the contract is awarded on price alone (or through petty cash/quotation processes).
The total points available are always 100. Your final score is the sum of your price points and your B-BBEE points.
Calculating Price Points (80/20 System)
Price points are calculated using the following formula, as prescribed in Regulation 5(1):
Ps = 80 × (1 − (Pt − Pmin) / Pmin)
Where:
- Ps = points scored for price
- Pt = price of bid under consideration
- Pmin = price of the lowest acceptable bid
Worked Example (80/20)
Three bids are received:
| Bidder | Price (incl. VAT) |
|---|---|
| Bidder A | R180,000 |
| Bidder B | R210,000 |
| Bidder C | R250,000 |
Lowest acceptable bid (Pmin) = R180,000
Bidder A (lowest): Ps = 80 × (1 − 0/180,000) = 80 points
Bidder B: Ps = 80 × (1 − (210,000 − 180,000)/180,000) = 80 × (1 − 0.1667) = 80 × 0.8333 = 66.67 points
Bidder C: Ps = 80 × (1 − (250,000 − 180,000)/180,000) = 80 × (1 − 0.3889) = 80 × 0.6111 = 48.89 points
B-BBEE Points (20 Points Available under 80/20)
Under Regulation 5(2) of the 2022 PPPFA Regulations, the B-BBEE preference points are:
| B-BBEE Status Level | Points (80/20) | Points (90/10) |
|---|---|---|
| Level 1 | 20 | 10 |
| Level 2 | 18 | 9 |
| Level 3 | 14 | 6 |
| Level 4 | 12 | 5 |
| Level 5 | 8 | 4 |
| Level 6 | 6 | 3 |
| Level 7 | 4 | 2 |
| Level 8 | 2 | 1 |
| Non-compliant | 0 | 0 |
Note: These are the points from the 2022 Regulations. The 2017 Regulations used a slightly different table (Levels 1 and 2 had the same 20 and 18 points, but Level 3 was 17 points). For tenders advertised under the 2022 Regulations (i.e., after 16 January 2023), the above table applies.
Worked Example: Full Score Calculation
Scenario: Tender value estimated at R3 million (80/20 system applies). Three compliant bids received.
| Bidder | Price | B-BBEE Level | Price Points | B-BBEE Points | Total |
|---|---|---|---|---|---|
| Bidder A | R2.9m | Level 4 | 80.00 | 12 | 92.00 |
| Bidder B | R2.7m (lowest) | Level 7 | 80.00 | 4 | 84.00 |
| Bidder C | R3.1m | Level 2 | 74.26 | 18 | 92.26 |
Winner: Bidder C — despite being the most expensive, the Level 2 B-BBEE status generates enough preference points to overtake Bidder A.
Key insight: At R3.1m vs R2.7m, Bidder C costs R400,000 more than the lowest bid. But the 14-point B-BBEE advantage (18 vs 4) compensates. This illustrates why B-BBEE status genuinely changes competitiveness at mid-range contract values.
Price Points Under the 90/10 System
For contracts above R50 million:
Ps = 90 × (1 − (Pt − Pmin) / Pmin)
The arithmetic is the same as 80/20, but the multiplier is 90 instead of 80. Price carries more weight, and B-BBEE points are compressed into a 10-point range.
How B-BBEE Status Is Determined for Preference Points
For Generic Enterprises (turnover > R50 million)
Must submit a valid B-BBEE verification certificate from an accredited verification agency (accredited by SANAS or a registered auditor under IRBA). The certificate must be current (not expired).
For Qualifying Small Enterprises (QSEs) (turnover R10m–R50m)
Can submit either:
- An accredited B-BBEE verification certificate, or
- A sworn affidavit on the prescribed DTIC format commissioned by a Commissioner of Oaths
QSEs that complete a full B-BBEE scorecard (all 5 elements) may achieve higher levels than those who use the simplified QSE scorecard.
For Exempted Micro Enterprises (EMEs) (turnover < R10 million)
Always submit a sworn affidavit. EMEs are automatically Level 4 (2 points for each rand of black ownership percentage × threshold formula). EMEs that are 100% black-owned are Level 1; 51%–99% black-owned are Level 2.
Important: The 51% and 30% Sub-contracting Provisions
Under Regulation 9 of the 2022 PPPFA Regulations, organs of state must impose sub-contracting conditions on contracts above certain thresholds where the primary contractor is not:
- At least 51% black-owned (for contracts above R30 million under 90/10), or
- Meeting sector-specific transformation criteria
If sub-contracting is imposed, it is a contractual condition — non-compliance after award can result in contract cancellation.
Disqualification vs. B-BBEE Level
Being a Level 8 or Non-compliant contributor does not disqualify you from tendering. It simply means you score 2 or 0 preference points. You can still win tenders if your price is competitive enough to compensate.
However, for contracts with specific B-BBEE pre-qualification criteria (increasingly common in large contracts), a minimum B-BBEE level may be set as a functionality threshold. For example, the bid document may specify “Only Level 1–4 contributors may bid.” This is different from the preference points calculation and will disqualify non-qualifying bids at the eligibility screening stage.
Abnormally Low Tenders and the Price Formula
The price formula rewards the lowest responsive bid with the maximum price points. This creates an incentive to price aggressively. However, note:
- Under Treasury Regulation 16A.6.3(c), accounting officers may investigate and reject abnormally low tenders
- An abnormally low tender (often defined as >20–30% below the next lowest price) raises concerns about ability to deliver and may trigger a request for detailed cost breakdown
- Submitting an unrealistically low price to maximise points — then claiming extras or variations during execution — is a procurement irregularity
Price your bids to be competitive but financially sound.
Frequently Asked Questions
Q: Can I claim a higher B-BBEE level than I actually hold? A: No. Submitting false B-BBEE information is a criminal offence under the B-BBEE Act and PRECCA. It also triggers contract cancellation under Regulation 14 of the 2022 PPPFA Regulations, and your company may be listed on the restricted supplier database.
Q: My B-BBEE certificate expired last week — can I still use it? A: Strictly, no. An expired certificate supports no points claim. Some departments accept certificates expired within 3 months in exceptional circumstances, but this is discretionary. Renew immediately.
Q: What if two bidders have identical total scores? A: Under Regulation 7 of the 2022 Regulations, if total scores are equal, the contract is awarded to the bidder with the highest B-BBEE points. If B-BBEE points are also equal, the accounting officer may use additional criteria specified in the bid document.
Q: Does the 80/20 system apply to quote-based procurement (below R500,000)? A: The formal 80/20 system applies from R30,000. However, many departments voluntarily apply B-BBEE preference even in quotation processes — this is legitimate under their SCM policies.
Q: Are there sectors where different rules apply? A: Yes. Certain designated sectors (e.g., clothing and textiles, construction) have sector-specific transformation regulations that may override or supplement the PPPFA preference points. Check the specific bid document and sector code.