B-BBEE in Construction: Understanding the Construction Sector Code

If you’re a construction company in South Africa, B-BBEE compliance isn’t optional — it’s essential for winning government tenders, accessing corporate contracts, and competing effectively in the local market. Yet many construction companies struggle with B-BBEE compliance, not because they don’t want to comply, but because they don’t fully understand how the Construction Sector Code works, what their scorecard requirements are, or how to track compliance effectively.

The Construction Sector Code is different from the generic B-BBEE codes. It has specific requirements tailored to the construction industry, including mandated procurement targets, skills development obligations, and ownership structures that reflect the sector’s unique characteristics.

This guide explains everything you need to know about B-BBEE in the construction sector: what the Construction Sector Code is, how the scorecard works, what each element requires, and how to maintain compliance effectively.

Why B-BBEE Matters Specifically for Construction Companies in SA

B-BBEE compliance is particularly critical for construction companies because:

Government tenders require it — Almost all public sector construction projects (municipalities, government departments, parastatals) require proof of B-BBEE status. Your B-BBEE level directly affects your ability to tender, and higher levels earn preferential procurement points.

Corporate clients expect it — Large corporates increasingly require B-BBEE certificates from their suppliers. Many corporate tenders include B-BBEE level as a scoring criterion, with Level 1 and Level 2 companies earning significantly more points than lower levels.

Preferential procurement recognition — Your B-BBEE level determines the procurement recognition percentage clients can claim when buying from you. Level 1 companies get 135% recognition, Level 2 gets 125%, Level 3 gets 110%, and so on. This makes you more attractive to B-BBEE-conscious clients.

Access to opportunities — Many construction projects are reserved for B-BBEE-compliant companies, or include B-BBEE requirements in their tender criteria. Without compliance, you’re excluded from significant portions of the market.

Industry transformation — The construction sector has specific transformation targets under the Construction Sector Code, reflecting the industry’s role in economic transformation and skills development.

Understanding and maintaining B-BBEE compliance isn’t just about checking a box — it’s about accessing opportunities, competing effectively, and contributing to South Africa’s economic transformation.

What Is the Construction Sector Code?

The Construction Sector Code is a sector-specific B-BBEE code issued under the Broad-Based Black Economic Empowerment Act (Act 53 of 2003). It was first published in 2009 and amended in November 2017 (Gazette No. 41287).

Why Construction Has Its Own Code

The construction sector has unique characteristics that justify a separate code:

Project-based work — Construction companies work on discrete projects with varying timelines, making continuous compliance tracking more complex than manufacturing or retail.
Subcontractor-heavy — Construction relies heavily on subcontractors, requiring sophisticated procurement tracking to ensure B-BBEE spend targets are met.
Skills-intensive — The sector requires significant skills development, including learnerships, artisan training, and professional development, which the code specifically addresses.
High transformation impact — Construction projects create jobs, develop skills, and transfer ownership in ways that align with B-BBEE objectives, so the code includes specific targets for these areas.
Procurement complexity — Construction procurement involves materials, labour, subcontractors, equipment, and services, requiring detailed tracking to meet procurement targets.

The Construction Sector Code recognises these unique characteristics and sets requirements that are realistic for construction companies while still driving meaningful transformation.

How It Differs from Generic Codes

The Construction Sector Code differs from the generic codes in several ways:

Higher procurement targets — The code requires 30% procurement from >51% black-owned suppliers (compared to 25% in generic codes), reflecting the sector’s procurement-heavy nature.
Skills development focus — The code emphasises learnerships, artisan training, and construction-specific skills development, recognising the sector’s skills needs.
Project-based tracking — The code allows for project-based compliance tracking, recognising that construction companies may have varying compliance levels across different projects.
Subcontractor recognition — The code includes specific provisions for recognising B-BBEE spend with subcontractors, which is critical for construction companies.
Mandated investments — The code includes requirements for mandated investments in black-owned construction companies, supporting sector transformation.

Understanding these differences is essential for construction companies — applying generic code requirements can lead to non-compliance or missed opportunities.

The Construction Sector Code Scorecard Explained

The Construction Sector Code uses a scorecard system with five elements, totalling 109 points. Your B-BBEE level (Level 1-8, or Non-Compliant) is determined by your total score.

Element 1: Ownership (25 points)

Ownership measures the percentage of your company owned by black people, black women, and black designated groups.

Scoring breakdown:

Black ownership: Up to 20 points (based on percentage of black ownership)
Black women ownership: Up to 3 points (bonus points for black women ownership)
Black designated groups: Up to 2 points (bonus points for ownership by black designated groups — black people with disabilities, black youth, black people in rural areas)

Key requirements:

Ownership must be meaningful — black shareholders must have real economic interest and voting rights
Ownership can be direct (shares held directly) or indirect (through black-owned entities)
Net value calculation considers the value of black ownership after debt

Mandated investments: The Construction Sector Code includes requirements for mandated investments — construction companies must invest a percentage of their annual turnover in black-owned construction companies or black-owned suppliers. This supports sector transformation by creating opportunities for black-owned businesses.

Common challenges:

Finding suitable black partners for ownership structures
Structuring ownership to meet requirements while maintaining operational control
Valuing ownership correctly for net value calculations
Meeting mandated investment requirements

Improving ownership score:

Bring in black shareholders (directly or through black-owned entities)
Increase black women ownership to earn bonus points
Structure ownership to maximise net value for black shareholders
Meet mandated investment requirements

Element 2: Management Control (19 points)

Management Control measures black representation in management positions, including board members, executive management, and senior management.

Scoring breakdown:

Black board participation: Up to 3 points (based on percentage of black board members)
Black executive management: Up to 5 points (based on percentage of black executives)
Black senior management: Up to 4 points (based on percentage of black senior managers)
Black middle management: Up to 2 points (based on percentage of black middle managers)
Black junior management: Up to 1 point (based on percentage of black junior managers)
Black representation in procurement: Up to 2 points (black people involved in procurement decisions)
Black representation in human resources: Up to 2 points (black people involved in HR decisions)

Key requirements:

Management positions must be real positions with decision-making authority
Black representation is measured as a percentage of total management positions
Bonus points are available for black women in management positions

Common challenges:

Finding qualified black candidates for management positions
Retaining black management talent
Ensuring black managers have real decision-making authority
Tracking management representation accurately

Improving management control score:

Appoint black board members
Promote black employees to executive and senior management positions
Ensure black representation in procurement and HR functions
Provide development opportunities for black employees to move into management

Element 3: Skills Development (20 points)

Skills Development measures your investment in developing black employees through training, learnerships, apprenticeships, and professional development.

Scoring breakdown:

Skills development spend: Up to 8 points (based on percentage of payroll spent on black skills development)
Learnerships: Up to 4 points (based on number of black learnerships)
Artisan training: Up to 3 points (based on number of black artisans trained)
Professional development: Up to 3 points (based on black employees receiving professional development)
Bursaries and scholarships: Up to 2 points (based on bursaries awarded to black students)

Key requirements:

Skills development spend must be at least 1.5% of payroll (for large enterprises) or 1% (for QSEs)
Training must be accredited or recognised
Learnerships must be registered with a SETA (Sector Education and Training Authority)
Artisan training must lead to trade test certification

Construction-specific focus: The Construction Sector Code emphasises construction-specific skills development:

Artisan training — Training black artisans in construction trades (plumbing, electrical, carpentry, etc.)
Learnerships — Registered learnerships in construction-related fields
Professional development — Training black employees in construction management, quantity surveying, engineering, etc.
Safety training — Construction safety training for black employees

Common challenges:

Finding accredited training providers for construction-specific skills
Balancing training costs with business needs
Ensuring training leads to recognised qualifications
Tracking skills development spend accurately

Improving skills development score:

Increase skills development spend to at least 1.5% of payroll
Register learnerships with the Construction SETA
Develop internal artisan training programmes
Provide professional development opportunities for black employees
Award bursaries to black students studying construction-related fields

Element 4: Enterprise and Supplier Development (40 points)

Enterprise and Supplier Development (ESD) is the largest element on the scorecard, reflecting the importance of procurement and supplier development in the construction sector.

Scoring breakdown:

Procurement from black-owned suppliers: Up to 15 points (based on percentage of procurement spend with black-owned suppliers)
Procurement from >51% black-owned suppliers: Up to 10 points (based on percentage of procurement spend with >51% black-owned suppliers)
Procurement from black women-owned suppliers: Up to 5 points (based on percentage of procurement spend with black women-owned suppliers)
Procurement from black designated groups: Up to 2 points (based on percentage of procurement spend with black designated groups)
Enterprise development: Up to 5 points (based on support provided to black-owned suppliers)
Supplier development: Up to 3 points (based on development support provided to black-owned suppliers)

Key requirements:

30% procurement target — Construction companies must procure at least 30% of their total procurement spend from >51% black-owned suppliers
Procurement tracking — All procurement spend must be tracked and categorised by supplier B-BBEE level
Supplier verification — Suppliers must have valid B-BBEE certificates or affidavits
Enterprise development — Support provided to black-owned suppliers (grants, loans, training, mentorship)
Supplier development — Development support to help black-owned suppliers improve their capabilities

Construction-specific procurement: Construction procurement includes:

Materials — Cement, steel, bricks, timber, electrical, plumbing materials
Subcontractors — Electrical, plumbing, roofing, painting, tiling subcontractors
Equipment — Construction equipment rental, tools, machinery
Services — Engineering, quantity surveying, architectural, legal, accounting services
Labour — Labour brokers, temporary workers

Common challenges:

Finding black-owned suppliers for all procurement categories
Tracking procurement spend across multiple projects
Verifying supplier B-BBEE certificates
Meeting the 30% target for >51% black-owned procurement
Balancing procurement requirements with cost and quality

Improving ESD score:

Increase procurement from black-owned suppliers (target 30% from >51% black-owned)
Prioritise procurement from black women-owned suppliers
Develop relationships with black-owned suppliers
Provide enterprise development support to black-owned suppliers
Track all procurement spend accurately by supplier B-BBEE level

Element 5: Socio-Economic Development (5 points)

Socio-Economic Development (SED) measures your contribution to community development and social initiatives.

Scoring breakdown:

SED contributions: Up to 5 points (based on percentage of net profit after tax spent on SED initiatives)

Key requirements:

SED spend must be at least 1% of net profit after tax
Contributions must benefit black people or black communities
Initiatives must be sustainable and measurable
Contributions can be monetary or in-kind (materials, equipment, expertise)

Construction-specific SED: Construction companies can contribute through:

Community infrastructure — Building schools, clinics, community centres
Skills development — Training community members in construction skills
Enterprise development — Supporting black-owned construction businesses in communities
Material donations — Donating construction materials to community projects
Expertise — Providing construction expertise to community projects

Common challenges:

Identifying suitable SED initiatives
Ensuring contributions are measurable and sustainable
Balancing SED spend with business needs
Tracking SED contributions accurately

Improving SED score:

Increase SED spend to at least 1% of net profit after tax
Focus on construction-related SED initiatives
Partner with community organisations
Document SED contributions with measurable outcomes
Ensure contributions benefit black communities

How B-BBEE Levels Work

Your B-BBEE level (Level 1-8, or Non-Compliant) is determined by your total scorecard points:

Level	Total Points	Procurement Recognition
Level 1	100+ points	135%
Level 2	95-99 points	125%
Level 3	90-94 points	110%
Level 4	80-89 points	100%
Level 5	75-79 points	80%
Level 6	70-74 points	60%
Level 7	55-69 points	50%
Level 8	40-54 points	10%
Non-Compliant	<40 points	0%

Procurement recognition means that when a B-BBEE-conscious client buys from you, they can claim a percentage of your procurement spend toward their own B-BBEE procurement targets. For example, if a client spends R100,000 with your Level 1 company, they can claim R135,000 toward their procurement targets.

Priority elements: The Construction Sector Code has three priority elements:

Ownership — Must score at least 40% of available points (10 out of 25)
Skills Development — Must score at least 40% of available points (8 out of 20)
Enterprise and Supplier Development — Must score at least 40% of available points (16 out of 40)

If you don’t meet the priority element thresholds, your B-BBEE level is automatically reduced by one level, even if your total score would otherwise qualify for a higher level.

B-BBEE Recognition Levels and Procurement

Your B-BBEE level directly affects your attractiveness to B-BBEE-conscious clients:

Level 1 (135% recognition) — The highest level, making you extremely attractive to clients seeking to maximise their B-BBEE procurement points. Level 1 companies often receive preferential treatment in tenders.

Level 2 (125% recognition) — Strong level that positions you well for most tenders. Many corporate clients prefer Level 2 or higher.

Level 3 (110% recognition) — Good level that meets most tender requirements. Level 3 companies can compete effectively but may lose out to Level 1 or Level 2 companies.

Level 4 (100% recognition) — Baseline level that meets minimum requirements. Level 4 companies can participate in most tenders but may struggle against higher-level competitors.

Level 5-8 (80%-10% recognition) — Lower levels that limit your competitiveness. Many tenders require Level 4 or higher, excluding Level 5-8 companies.

Non-Compliant (0% recognition) — Excluded from most government and corporate tenders. Non-compliant companies cannot compete effectively in the South African market.

Why Construction Has Specific Requirements

The Construction Sector Code includes specific requirements that reflect the sector’s unique characteristics:

Project-based work — Construction companies work on discrete projects, so the code allows for project-based compliance tracking. This recognises that compliance levels may vary across projects.

Subcontractor-heavy — Construction relies heavily on subcontractors, so the code includes specific provisions for recognising B-BBEE spend with subcontractors. This is critical for meeting procurement targets.

Skills-intensive — The sector requires significant skills development, so the code emphasises learnerships, artisan training, and construction-specific skills development.

High transformation impact — Construction projects create jobs, develop skills, and transfer ownership, so the code includes specific targets for these areas.

Procurement complexity — Construction procurement involves materials, labour, subcontractors, equipment, and services, requiring detailed tracking to meet procurement targets.

Mandated investments — The code includes requirements for mandated investments in black-owned construction companies, supporting sector transformation.

Understanding these sector-specific requirements is essential for construction companies — applying generic code requirements can lead to non-compliance or missed opportunities.

Qualifying Small Enterprise (QSE) vs Large Enterprise Thresholds

The Construction Sector Code distinguishes between Qualifying Small Enterprises (QSEs) and Large Enterprises:

QSE thresholds:

Annual turnover between R10 million and R50 million
QSEs use a simplified scorecard with lower point requirements
QSEs must still meet priority element thresholds but with adjusted percentages

Large Enterprise thresholds:

Annual turnover above R50 million
Large Enterprises use the full scorecard with all 109 points
Large Enterprises must meet all priority element thresholds

Exempted Micro Enterprises (EMEs):

Annual turnover below R10 million
EMEs are automatically recognised as Level 4 B-BBEE contributors
EMEs don’t need to complete a full scorecard assessment
EMEs can still improve their level by completing a scorecard assessment

Why thresholds matter:

QSEs have simplified requirements, making compliance more achievable
Large Enterprises face more stringent requirements but have more resources
EMEs can focus on growth without full B-BBEE compliance until they exceed R10 million turnover

Understanding your enterprise category helps you plan your B-BBEE compliance strategy appropriately.

Exempted Micro Enterprises (EMEs) — Turnover Below R10 Million

If your construction company has annual turnover below R10 million, you’re classified as an Exempted Micro Enterprise (EME):

Automatic Level 4 recognition:

EMEs are automatically recognised as Level 4 B-BBEE contributors
No scorecard assessment required
Valid for one year from date of issue

Optional scorecard assessment:

EMEs can choose to complete a full scorecard assessment
If you score higher than Level 4, you’ll receive the higher level
If you score lower than Level 4, you’ll still receive Level 4 (EME protection)

Benefits of EME status:

No compliance costs (no verification fees)
Automatic Level 4 recognition
Focus on business growth without compliance burden
Can still improve level through voluntary assessment

When EME status ends:

When your annual turnover exceeds R10 million
You then become a QSE and must complete a scorecard assessment
Plan ahead — start tracking compliance before you exceed R10 million

Planning for growth:

Start tracking B-BBEE compliance before you exceed R10 million
Build relationships with black-owned suppliers early
Develop black employees for future management positions
Consider ownership structures that support B-BBEE compliance

EME status provides a grace period for small construction companies, but it’s important to plan for compliance as you grow.

Common B-BBEE Challenges for Construction Companies

Construction companies face several unique challenges in achieving B-BBEE compliance:

Challenge 1: Procurement Tracking Complexity

The problem: Construction companies procure from hundreds of suppliers across multiple projects, making it difficult to track B-BBEE spend accurately.

The solution: Use construction management software with built-in B-BBEE procurement tracking. Software like Wakha automatically tracks procurement spend by supplier B-BBEE level, calculates procurement percentages, and generates compliance reports.

Challenge 2: Finding Black-Owned Suppliers

The problem: Not all procurement categories have readily available black-owned suppliers, especially for specialised materials or services.

The solution: Actively develop relationships with black-owned suppliers. Provide enterprise development support to help black-owned suppliers grow. Consider forming partnerships with black-owned suppliers to meet procurement targets.

Challenge 3: Meeting the 30% Target

The problem: The Construction Sector Code requires 30% procurement from >51% black-owned suppliers, which can be challenging to achieve across all procurement categories.

The solution: Focus on high-spend categories first (materials, subcontractors). Develop black-owned suppliers in these categories. Track procurement by category to identify opportunities. Consider forming joint ventures with black-owned suppliers.

Challenge 4: Skills Development Costs

The problem: Skills development requires significant investment, especially for learnerships and artisan training.

The solution: Leverage SETA funding for learnerships and artisan training. Partner with training providers to reduce costs. Focus on construction-specific skills that benefit your business. Track skills development spend accurately to maximise scorecard points.

Challenge 5: Ownership Structures

The problem: Finding suitable black partners for ownership structures while maintaining operational control can be challenging.

The solution: Consider indirect ownership through black-owned entities. Structure ownership to maximise net value for black shareholders. Ensure black shareholders have meaningful economic interest and voting rights. Seek professional advice on ownership structures.

Challenge 6: Verification Costs

The problem: B-BBEE verification can be expensive, especially for large enterprises with complex structures.

The solution: Choose a SANAS-accredited verification agency with construction sector experience. Prepare documentation thoroughly to reduce verification time. Consider multi-year verification agreements for cost savings. Use software to maintain compliance documentation.

Challenge 7: Maintaining Compliance

The problem: B-BBEE compliance is ongoing, requiring continuous tracking and documentation.

The solution: Use software to automate compliance tracking. Maintain compliance documentation throughout the year, not just before verification. Review compliance quarterly to identify issues early. Train staff on B-BBEE requirements and tracking processes.

How Wakha Tracks B-BBEE Procurement Compliance Automatically

Managing B-BBEE compliance manually is time-consuming and error-prone. Wakha Construction & Property Development Management Software includes built-in B-BBEE procurement tracking that automates compliance management.

Automatic Procurement Tracking

Wakha automatically tracks all procurement spend by supplier B-BBEE level:

Supplier B-BBEE levels — Store supplier B-BBEE certificates and expiry dates
Automatic categorisation — Categorise procurement by supplier B-BBEE level (>51% black-owned, black women-owned, etc.)
Real-time calculations — Calculate procurement percentages in real-time as you spend
Project-based tracking — Track B-BBEE spend per project or across all projects
Category breakdown — See procurement by category (materials, subcontractors, services, etc.)

B-BBEE Compliance Reports

Wakha generates B-BBEE compliance reports for verification agents:

Procurement summary — Total spend by supplier B-BBEE level
Category breakdown — Procurement by category and B-BBEE level
Supplier list — All suppliers with B-BBEE levels and certificates
Compliance dashboard — Visual dashboard showing compliance status
Export capabilities — Export reports for verification agents

Supplier Management

Wakha helps you manage supplier B-BBEE compliance:

Supplier database — Centralised database of all suppliers with B-BBEE information
Certificate tracking — Track B-BBEE certificate expiry dates and renewal reminders
Verification status — Verify supplier B-BBEE certificates before procurement
Supplier development — Track enterprise development support provided to suppliers

Procurement Planning

Wakha helps you plan procurement to meet B-BBEE targets:

Target tracking — Set B-BBEE procurement targets and track progress
Opportunity identification — Identify procurement categories with low B-BBEE spend
Supplier recommendations — Suggest black-owned suppliers for procurement categories
Compliance forecasting — Forecast compliance levels based on planned procurement

Integration with Project Management

Wakha integrates B-BBEE tracking with project management:

Project budgets — Include B-BBEE targets in project budgets
Purchase orders — Track B-BBEE spend through purchase orders
Invoices — Automatically categorise invoices by supplier B-BBEE level
Payment certificates — Include B-BBEE compliance in payment certificates

All Plans Include B-BBEE Tracker

Wakha’s B-BBEE tracker is included in all plans, from the Builder plan (R2,499/month) to the Developer plan (R6,999/month). You don’t need to pay extra for B-BBEE compliance features — they’re built into the platform.

Learn more about Wakha’s B-BBEE procurement tracking or contact us to see how it can help your construction company maintain B-BBEE compliance automatically.

Frequently Asked Questions

What is the difference between the Construction Sector Code and generic B-BBEE codes?

The Construction Sector Code is sector-specific, with requirements tailored to construction companies. Key differences include:

Higher procurement targets (30% from >51% black-owned vs 25% in generic codes)
Emphasis on construction-specific skills development (learnerships, artisan training)
Project-based compliance tracking
Specific provisions for subcontractor B-BBEE recognition
Mandated investment requirements

How often do I need to verify my B-BBEE status?

B-BBEE certificates are valid for one year from the date of issue. You need to renew your certificate annually through a SANAS-accredited verification agency. However, you should track compliance continuously throughout the year, not just before verification.

What happens if I don’t meet the priority element thresholds?

If you don’t meet the priority element thresholds (40% of available points for Ownership, Skills Development, and ESD), your B-BBEE level is automatically reduced by one level, even if your total score would otherwise qualify for a higher level. For example, if you score 95 points but don’t meet a priority element threshold, you’ll be Level 3 instead of Level 2.

Can I use procurement from previous years for my current B-BBEE assessment?

No. B-BBEE assessments are based on the most recent 12 months of financial data. You cannot use procurement from previous years unless it falls within the assessment period. This is why continuous tracking is essential — you can’t retroactively improve your procurement score.

How do I find black-owned suppliers for construction materials?

Finding black-owned suppliers requires active effort:

Search the B-BBEE supplier databases
Attend construction industry events and networking functions
Contact industry associations (Master Builders South Africa, SAFCEC)
Ask existing suppliers for referrals
Provide enterprise development support to help black-owned suppliers grow
Consider forming partnerships with black-owned suppliers

What is the minimum B-BBEE level required for government tenders?

Most government tenders require a minimum B-BBEE level, typically Level 4 or higher. However, higher levels (Level 1-3) earn more preferential procurement points, making you more competitive. Some tenders specifically require Level 1 or Level 2. Always check the tender requirements before submitting.

How much does B-BBEE verification cost?

B-BBEE verification costs vary by company size and complexity:

Small companies (QSEs): R3,000-R8,000
Medium companies: R8,000-R15,000
Large companies: R15,000-R50,000+

Costs depend on the verification agency, company complexity, and documentation quality. Choose a SANAS-accredited agency with construction sector experience.

Can I improve my B-BBEE level during the year?

Yes. Your B-BBEE level is assessed annually, but you can improve your score throughout the year by:

Increasing procurement from black-owned suppliers
Providing skills development to black employees
Appointing black management
Increasing black ownership
Providing SED contributions

Track compliance continuously to identify improvement opportunities before your next verification.

Conclusion

B-BBEE compliance is essential for construction companies in South Africa. The Construction Sector Code sets specific requirements tailored to the construction industry, including procurement targets, skills development obligations, and ownership structures that reflect the sector’s unique characteristics.

Understanding the Construction Sector Code scorecard — Ownership (25 points), Management Control (19 points), Skills Development (20 points), Enterprise and Supplier Development (40 points), and Socio-Economic Development (5 points) — is the first step toward achieving and maintaining compliance.

Your B-BBEE level (Level 1-8, or Non-Compliant) directly affects your ability to win tenders, access corporate contracts, and compete effectively. Higher levels earn better procurement recognition percentages, making you more attractive to B-BBEE-conscious clients.

Construction companies face unique challenges in achieving B-BBEE compliance, from procurement tracking complexity to finding black-owned suppliers. However, with proper planning, continuous tracking, and the right tools, compliance is achievable.

Wakha Construction & Property Development Management Software includes built-in B-BBEE procurement tracking that automates compliance management. Wakha automatically tracks procurement spend by supplier B-BBEE level, generates compliance reports for verification agents, and helps you plan procurement to meet B-BBEE targets.

Learn more about Wakha’s B-BBEE compliance features or contact us to see how it can help your construction company maintain B-BBEE compliance automatically.

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