Issue Date: 
Tuesday, July 31, 2018

3 Sub-contracting rules to be aware of when responding to tenders

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting, due in large part to The Preferential Procurement Regulations, 2017 that has been implemented on the 1st of April 2017. Many entrepreneurs ask us whether they should sub-contract or not, in responding to a tender and how and where do they get onto the sub-contracting lists.

There are 3 sub-contracting rules in the Preferential Procurement Regulations 2017 that Organs of State can/must apply when issuing tenders to the general public.

The first Regulation is Regulation 4 which state inter alia: if an Organ of State decides to apply pre-qualification criteria to advance certain designated groups that Organ of State must ADVERTISE the tender with a specific tendering condition that certain bidders can or may respond.

The second Regulation is Regulation 9 which state inter alia: if it is feasible to sub-contract for a contract above R30 million, an Organ of State must apply sub-contracting to advance designated groups.

The designate groups mentioned in both Regulation 4 and 9 are Black Owned Enterprises with 51% or more black ownership and any of female Black owned, youth black owned, black people with disabilities owned or black military veterans owned enterprises.

The third sub-contracting rule has to do with sub-contracting after the award of the tender. Regulation 12 states inter alia: (3) a person awarded a contract may not subcontract more than 25% of the value of the contract to any other enterprise that does not have an equal or higher B-BBEE status level of contributor than the person concerned, unless the contract is subcontracted to an EME that has the capability and ability to execute the subcontract.

The tender document will dictate how you should or should not sub-contract. Read the tender document carefully; follow the instructions precisely and to the point. Organs of State are applying these Regulations rigorously and failing to comply will lead to your tender response being disqualified.

Tender trends and Regulations are changing frequently. To keep up to date with these changes we recommend attending one of our How-to-Tender workshops that are presented across South Africa. Tender Workshop dates are published on our website at www.how2tender.com or for more information on the How-to-Tender workshops please email us at werner@how2tender.com

This article was written by Werner van Rooyen, Director of HowToTender which specializes in tender consulting and tender training.

Title Closing Date Tender No.
Supply: Boots 2018-10-22 10:00 GA11900342
Supply: Tools and equipment 2018-10-17 12:00 GD11900441
Timber 2018-10-18 14:00 PNQ2 TIMBER
Sale of institutional zone 2 property: Erf 10046: Beaufort West 2018-10-26 14:00 Notice No. 100/2018
Supply: Hardware items 2018-10-18 12:00 GG11900591
Alien and unwanted vegetation clearing and cleaning, grass cutting of open erven inclusive of all illegal dumping 2018-10-24 11:00 FQ/SM: 46/19
Supply, delivery and installation of play equipment in various parks in Stellenbosch (WC 024) 2018-10-25 00:00 FQ/SM : 42/19
Pattern Making Training 2018. 2018-10-17 11:00 7G‐128
Supply, delivery and installation of palisade fencing: parks and cemeteries in Stellenbosch (WC 024) 2018-10-25 11:00 FQ/SM: 43/19
Supply and delivery of Structural Fire Fighting Suits with a 100% Local Content as and when needed until 30 October 2019 2018-10-24 11:00 FQ/SM : 32/19
Remove, Supply and Install of up to 100 Wayfinding Signs (refer detailed appendix 1). 2018-10-19 14:30 WO.477043
Supply, delivery and Off-Loading of Garden Equipment 2018-10-24 11:00 FQ/SM : 34/19
Supply and delivery of Uniform for Law Enforcement 2018-10-25 11:00 FQ/SM 48/19
Sale of vacant residential erven and business zone 1 properties in Merweville 2018-10-26 14:00 Notice No. 98/2018
Bulk meter replacements and telementry installations on an as and when basis for a period of 36 months. 2018-11-20 10:30 JW 13901
MBDA seeks suitable service providers to quote for Plastic Recycle Bins with Lids 2018-10-22 11:00 BDA1018626
The MBDA seeks quotes for: 1 * Windows 10 Pro 64GB,14"-Core i7 6820HQ-8GB RAM-500GB HDD, Intel Graphics 530,TPM Security Chip and Backlight 1 * Backpack for laptop 2018-10-22 11:00 BDA1018625
Supply and Deliver Riot Shields Protection 2018-10-22 11:00 GQ10181960
Linbro Water Upgrades. 2018-11-20 10:30 JW 13899
Supply and Deliver Deluxe Riot Helmets 2018-10-22 11:00 GQ10181960

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Advantages and disadvantages of Consortiums

Consortiums are often considered as entities to use when responding to tenders in South Africa. The question that arises is whether to use a Consortium or a Joint Venture when responding to a tender. To help you with this we have compiled a list of advantages and disadvantages for both Consortiums as well as Joint Ventures. In this article we list the advantages and disadvantages of Consortiums. Look out for the same article on Joint Ventures.

Consortiums Advantages:

  • Easy to establish as there are no formal procedures... Read More
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