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.
The Betterment, Regravelling and Drainage on D1525 From Km 0.00 To Km 4.00 in the Maphumulo Local Municipality (KZ294) For Grade 3CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 3/ C2940/ 007/ S/ 1/ 2018- 2019
The Appointment of a Structural Engineer to Assess the Structural Integrity of Roofs for the Rooftop Solar Project. 2018-11-09 11:00 GT/ GIFA/ 146/ 2018
The Construction Of Sidewalks On D893 From Km 0.80 To Km 1.10 In The Maphumulo Local Municipality (Kz294) Contract 2 For Grade 2CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT 373T/ 2/ C2940/ 186/ S/ 1/ 2018- 2019
Invitation for open tender for the development of a Transport Masterplan for the 7157ha of the Tshwane Automotive City in Rosslyn. 2018-11-13 11:00 AIDC T07/ 2018
The Betterment, Regravelling and Drainage On D881 From Km 0.00 To Km 6.00 In The Maphumulo Local Municipality (Kz294) For GRADE 3CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 3/ C2940/ 004/ S/ 1/ 2018- 2019
The Betterment, Regravelling And Drainage On P224 From Km 0.000 To Km 4.386 In The Mandeni Local Municipality (Kz291) For Grade 3CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 3/ C2910/ 008/ S/ 1/ 2018- 2019
The Construction of Sidewalks on D894 From Km 1.00 To Km 1.30 in the Maphumulo Local Municipality (KZ294) for Grade 2CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 2/ C2940/ 187/ S/ 1/ 2018- 2019
The aim of the project is to undertake a province-wide physical verification of all spaza shops and produce quality reliable data to assist the GEP and Gauteng Department of Economic Development (GDED to make informed decisions pertaining to legal and illegal spaza shops. 2018-11-13 11:00 GEP003/ SPAZASHOPPROJECT/ 18
The Betterment, Regravelling And Drainage On D1632 From Km 4.50 To Km 8.50 In The Maphumulo Local Municipality (KZ294) For Grade 3CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT 373T/ 3/ C2940/ 009/ S/ 1/ 2018- 2019
The Betterment, Regravelling And Drainage On D1527 From Km 4.00 To Km 8.00 In The Maphumulo Local Municipality (Kz294) For Grade 3CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT373T/ 3/ C2940/ 002/ S/ 1/ 2018- 2019
The Betterment, Regravelling and Drainage On P719 From Km 4.00 To Km 8.00 in the Mandeni Local Municipality (Kz291) For GRADE 3CE Vukuzakhe Contractors. 2018-11-22 11:00 ZNT 373T/ 3/ C2910/ 006/ S/ 1/ 2018- 2019
Development test of visual perception -third edition 2018-10-30 11:00 PSH 492/ 1819
The Betterment, Regravelling and Drainage On L2450 From Km 0.00 To Km 6.00 in the Mandeni Local Municipality (Kz291) For Grade 3CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT373T/ 3/ C2910/ 003/ S/ 1/ 2018- 2019
The Betterment, Regravelling and Drainage On D1632 From Km 0.00 To Km 4.50 in the Maphumulo Local Municipality (KZ294) For Grade 3CE Vukuzakhe Contractors 2018-11-22 11:00 ZNT 373T/ 3/ C2940/ 005/ S/ 1/ 2018- 2019
Provision of accredited training, establish SMME’s & Cooperatives, provide job readiness and training. 2018-11-13 11:00 GEP005/ YOUTHYMPO18
Aspirating tube. Size: 8ml. 2018-10-30 11:00 PSH 961/ 1819
Appointment of a service provider at the Independent Communications Authority of South Africa for restoration of Pinmill Farm Premises on an 80/20 PPPFA 2000, Preferential Procurement Regulation: 2017 2018-10-26 11:00 ICASA 20/ 2018
The Financial Intelligence Centre request for information for a contract management tool. 2018-11-10 11:00 National: Financial Intelligence Centre: Supply Chain Management
The Financial Intelligence Centre request proposals from service providers for procurement of an Automated Web Search Application for use by the Financial Intelligence Centre. 2018-11-09 11:00 FIC/ RFB/ WEBSEARCH/ 1/ 0004/ 2018/ 19
Invitation to an Open Tender for the Appointment of Panel of Contractors to Assist AIDC With Various Infrastructure And Maintenance Projects for a period of 3 years 2018-11-09 11:00 AIDC T05/ 2018

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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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