In the fast-paced world of private sector procurement, requests for proposals (RFPs) are an essential tool for securing goods, services, and partnerships. But when these RFPs are issued without properly interrogating the business objectives that drive them — particularly where empowerment criteria are concerned — the consequences can be commercially risky, legally questionable, and reputationally damaging.

An RFP is more than a procurement formality. It reflects an organisation’s strategic direction, operational priorities, and transformation objectives. Increasingly, private sector RFPs include requirements aimed at driving transformation— such as specific broad-based black economic empowerment (BEE) scorecard thresholds, black ownership levels, or supplier development initiatives. RFPs are an important mechanism used by a company to achieve its empowerment objectives. But if these empowerment criteria are inserted mechanistically, without alignment to the business’s actual needs, values, or structure, or without consideration for how they will be implemented, the RFP becomes a ticking time bomb.

What Could Go Wrong?

1. Misalignment with commercial realities

It is not uncommon for a business unit or procurement team to recycle empowerment requirements from another RFP — or to impose empowerment criteria that the company itself cannot support post-award. For example, requiring a service provider to be 51% black-owned may have been required by the business in a previous measurement period, but may not be where the business’s procurement scorecard is lacking in the current measurement period. This may result in potential suppliers not responding to the RFP as they don’t meet the qualification criteria, where they may have had the actual BEE credentials that the business needed.

2. RFPs incentivising fronting

Too often, companies treat empowerment as a checkbox exercise. They mandate certain BEE credentials in the RFP but fail to interrogate how their bidders will comply with those requirements. This superficial approach can result in contracts being awarded to “empowered” entities with little substance — or, worse, to fronting entities. By not only including these entities into their supply chain and encouraging or even requiring this type of conduct in an RFP create the risk for significant reputational and legal fallout.

3. Increasing business risks

By creating requirements that incentivise or require non-compliant BEE arrangements and then procuring goods or services from such suppliers, the RFP issuer brings fronting risk into their own business as they are recognising BEE credentials that they not or should not be entitled to claim if the true arrangements were disclosed. Verification agents have an obligation to report any suspected fronting practices to the BEE Commission, and this is increasingly occurring. In addition, as a bidding process has been created, we are seeing unsuccessful bidders subsequently reporting RFPs to the BEE Commission for review for non-compliance with BEE laws.

A Case Study

For example, a company is having difficulties in procuring sufficient values from exempted micro enterprises, being entities with an annual turnover of less than R10 million (EMEs) or qualifying small enterprises being entities with an annual turnover between R10 million and R50 million (QSEs) and the company is therefore not obtaining these points towards its BEE procurement scorecard.  The company is in the process of developing an RFP in relation to a large- scale project. Business asks the RFP drafters to include requirements for EMEs and QSEs as part of the RFP. The RFP drafters cannot require that the bidder itself is an EME or QSE due to the size of the project, and accordingly requires the following structure:

  • the bidder will be required to locate and identify a number of EMEs and QSEs;
  • the bidder is required to “give” work equal to a stated percentage of the value of the project to the EMEs and QSEs;
  • the EMEs and QSEs will issue invoices directly to the RFP issuer in relation to the services provided;
  • the core supplier relationship will remain between the RFP issuer and the bidder;
  • the bidder will be responsible for the communication and engagement with, and performance, monitoring, and liability of the EMEs and QSEs in relation to their services provided, but this is not a specific service that is being provided or paid for.

For purposes of the issuer, the RFP achieves three key business objectives:

  • it creates a contractual relationship between the issuer and the EMEs and QSEs which allows for the issuer to claim procurement from the EMEs and QSEs;
  • limits the administrative difficulties for the issuer by pushing down the obligation to identify, allocate work to and monitor the performance of the EMEs and QSEs; and
  • limits the issuer’s business risks because it is the bidder that is responsible for the performance of the EMEs and QSEs, and against whom the issuer will claim against should any issues arrives.

Whilst these business objectives are achieved, they give rise to a BEE concern. The concern is that the issuer is claiming the BEE credentials of the EMEs and QSEs towards its procurement scorecard – however, that is not where the true procurement relationship is. The true procurement relationship is still between the issuer and the bidder. The true nature of the relationship between the parties is (1) a procurement relationship between the issuer and the bidder, and (2) a sub-contracting relationship between the bidder and the EMEs and QSEs.

The EME’s and QSE’s credentials should count towards the procurement scorecard of the bidder and not the issuer. By the RFP including a requirement that the EMEs and QSEs will invoice it directly but whilst the true supplier arrangement remains between the issuer and the bidder, the RFP effectively requires that the various bidder and the EMEs and QSEs misrepresent the true nature of their contractual relationships which can constitute a fronting practice.

To avoid these risks, private sector entities should:

  1. Interrogate business objectives before incorporating them into procurement documents. Ask: What is the transformation goal? Is it aligned with available supply? Can we achieve it in a way that encourages sustainable empowerment rather than form-over-substance compliance?
  2. Update internal RFP templates and training to help procurement teams identify and respond to problematic or unrealistic business instructions.
  3. Engage internal stakeholders, including legal, transformation, and procurement teams, to stress-test empowerment criteria before they are included in RFPs.
  4. Engage external advisors to review and confirm empowerment criteria and the practical implications of compliance.
  5. Ensure clarity and transparency, both in how the empowerment criteria are framed and how they will be scored.

Conclusion: Caution, Not Complacency

Embedding transformation in procurement is vital. But it must be done thoughtfully, lawfully, and with a clear-eyed understanding of the consequences of compliance. RFPs are not the place for aspirational goal-setting or tick-box compliance without accountability or evidence. When empowerment criteria are not appropriately interrogated, the risk is that well-intentioned procurement can end up encouraging the very practices it seeks to eliminate.

Failure to do so risks not only legal consequences, but also the dilution of transformation itself.