Total Measured Procurement Spend (TMPS) is a measure of all expenses incurred by an entity throughout their measurement period, with certain expenses being excluded due to the nature of those expenses. It is meant to align to the total rand value spent with all suppliers. This figure is used to calculate an entity’s procurement scorecard, by measuring B-BBEE spend as a fraction of ‘total spend’ or TMPS.
A verification agency will calculate the TMPS of an entity from their financial statements, in the following way:
1) Adding up all the entity’s expenditure on goods and services for the measurement period by summing:
- Cost of Sales;
- Operational Expenditure; and
- Capital Expenditure.
2) Subtract certain exclusions which represent spend on goods and services for which no B-BBEE certificate is available, or for which they have no choice of services provider. The main exclusions looked at by a Verification Agency are:
- Salaries and wages paid to employees;
- Tax related expenditure such as VAT, and rates and taxes paid to a municipality;
Pass-through third-party procurement where the cost of that procurement is an expense recorded in the third-party’s annual financial statements and is not recorded in the measured entity’s annual financial statements;
Empowerment related procurement, i.e. investments in or loans to an Associated Enterprise or investments, loans or donations qualifying for recognition under Enterprise Development or Socio-Economic Development;
- All goods and services procured from organs of state and public entities Despite this, procurement by a Measured Entity from a local government authority, which is a reseller of that service, is measurable at the B-BBEE Recognition Level of the primary Supplier of the service;
- in any event, any procurement of any goods or services from any organ of state or public entity that enjoys a statutory or regulated monopoly in the supply of such goods or services, is excluded;
- Third-party procurement where the cost of that procurement is an expense recorded in the measured entity’s annual financial statements;
- Labour brokers and independent contractors, i.e. outsourced labour expenditure;
- Pension and medical aid contributions: payments made to any post retirement funding scheme or to a medical aid or similar medical insurer by a Measured Entity for its employees, excluding any portions of such payments which are a contribution to a capital investment of the employee. The scheme or insurer must issue a certificate dividing payments between the capital investment portion and the balance to establish the amount that is measurable within Total Measured Procurement Spend;
- Trade commission's: any commission or similar payments payable by a Measured Entity to any other person pursuant to the business or trade of the Measured Entity;
- Empowerment related expenditure, i.e. expenditure incurred in facilitating Enterprise Development and Socio-Economic Development contributions;
- Intra-group procurement
- Imports, if they meet the following criteria:
imported capital goods or components for value-added production in
South Africa provided that:
- there is no existing local production of such capital goods or components; and
- importing those capital goods or components promotes further value-added production within South Africa;
imported goods and services other than those listed above if there is no local production of those goods or services including, but not limited to, imported goods or services that –
- carry a brand different to the locally produced goods or services; or
- have different technical specifications to the locally produced goods or services.
The exclusion of imports listed under above are subject to them having developed and implemented an Enterprise Development and Supplier Development plan for imported goods and services.
This plan should include:
- Clear objectives
- Priority interventions
- Key performance indicators; and
- A concise implementation plan with clearly articulated milestones
The Department of Trade and Industry will from time to time consult with the industry and issue practice notes with regard to the provisions on import exclusion.
Treatment of TMPS in our systems
Within the BEEtoolkit, TMPS will always need to be inserted by the user. Within the Supplier Management System however, TMPS can either be inserted by the user, or it can be approximated by the system by selecting ‘sum from the spreadsheet’. In this case, the system will add all the spend items loaded by the user, and use this figure as the TMPS. Please note however, that this is not an accurate TMPS figure, as it is not taken from the entity’s financials, and as such may not include all expense items. Generally, using the approximated TMPS will result in a higher score than the entity will achieve at verification, and should only be used when an accurate calculation from the financials is not practical.